The US housing market reaches a record value of $47 trillion due to low inventory causing prices to soar
Redfin has reported that the US housing market recently achieved a remarkable milestone, reaching an unprecedented valuation of $47 trillion. This surpasses the previous record of $46.6 trillion, which was established just a year ago. The rise in home values can be attributed to low inventory, as indicated by Redfin’s analysis of 90 million residences across the country.
The latest figures have outperformed last year’s record, surpassing the previous $46.6 trillion. The report1 suggests that a scarcity of homes has been upholding housing prices, based on Redfin’s assessment of over 90 million residential properties in the US. Home values in the US have increased by 0.4% compared to the previous year in June, and they are now 19.1% higher than they were two years ago.
Interestingly, the housing market has successfully compensated for the $2.9 trillion decline in value experienced between June 2022 and February 2023, which was a consequence of rising mortgage rates.
Redfin economist Chen Zhao mentioned that the prevalence of the 30-year fixed rate mortgage in the United States is upholding home values. Many homeowners secured an exceptional deal during the pandemic, obtaining a 3% mortgage rate for the duration of their 30-year loan. As a result, they are hesitant to move since that would involve accepting a rate twice as high. This situation has led to current buyers competing intensely for a limited number of homes, thereby preventing a sharp decline in home values.
The report indicates that nearly 90% of homeowners with mortgages currently enjoy rates below 6%, significantly lower than the nearly 7% levels observed after 2022. Consequently, only 1% of the nation’s homes have changed hands this year, marking the lowest figure in at least ten years. Simultaneously, the quantity of homes available for purchase in the US reached an unprecedented low in June, dropping by 15% on a yearly basis.
Other findings in Redfin’s latest survey included:
1. In June, Los Angeles experienced the largest drop in overall home value, with a staggering $152.6 billion annual decline.
2. Homes valued between $500,000 and $750,000 saw a 4.1% increase in value over the year, while those priced between $2 million and $5 million experienced a 7.4% decrease.
3. Urban areas saw a more significant decline in home values compared to suburban and rural regions.
4. Millennials now hold a greater share of the real estate market’s value compared to the silent generation, born between 1925 and 1945.
