To give you an idea of how tight the U.S. residential real estate market has become, look at what’s going on in Ketchum, Idaho, about 150 miles west of the state capital of Boise.
Housing in this tourism-dependent town of fewer than 3,000 residents is so scarce the mayor recently floated an idea of establishing a tent city for local workers who are unable to find permanent quarters, according to the Wall Street Journal. The city council rejected the proposal, but it illustrates the lengths to which officials are willing to go to deal with the housing crunch. (These are the cities where home values are rising the fastest.)
Thanks to low interest rates and a wave of demand, some of which has been fueled by urban exoduses of affluent people fleeing Covid-19 hot spots like New York City, housing inventories have shrunk while the cost of raw building materials has skyrocketed. Entire regions of New England and the West, from tiny tourism-dependent communities to larger metro areas, have been hammered by home-price inflation since the spring of 2020. (See what is now the most expensive zip code in your state.)
To identify the states that had the largest home price increases in 2020, 24/7 Wall St. reviewed the price insights report published July 6 from property information company CoreLogic. The ranking is based on the year over year change in home prices based on CoreLogic’s home price index for May 2020 and May 2021.
For the purpose of comparison, we obtained each state’s annual median home value from the U.S. Census Bureau’s 2019 American Community Survey. 2019 is the latest year for which such data is available.
Those who own non-mortgaged homes have certainly become wealthier than they were last year. According to property information provider CoreLogic, the national average increase in home equity increased $30,000 in May 2021 compared to May 2020. In some markets, that figure is higher, while buyers fight local bidding wars over limited available housing.
As home value continues to appreciate, market watchers see no end in sight — yet. According to the Mortgage Bankers Association, however, housing starts are expected to rise considerably over the next two years, which should provide some relief to near-future homebuyers.