Pandemic Can’t Stop Home Price Increases

The pandemic and all its associated fallout (high unemployment, a tanking economy, shuttered storefronts and a rollercoaster stock market, to name a few) hasn’t been able to dampen the spirits of the residential home market, as 96% of metro areas are reporting an increase in home prices in Q2, according to a report by the National Association of Realtors.

According to the report, 174 of 181 metro areas surveyed saw price increases in Q2, with an average of 4.2% year-over-year. While an increase, the gain was below the 7.7% increase from Q1 of 2020. 

“Home prices have held up well, largely due to the combination of very strong demand for housing and a limited supply of homes for sale,” Lawrence Yun, NAR chief economist, said in a statement.  “Historically-low inventory continues to reinforce and even increase prices in some areas.”

While low mortgage rates and a desire to get out of some larger metro areas have increased the number of potential buyers, the lack of new home stock has allowed prices to continue to rise, according to Yun. 

“Unless an increasing number of new homes are constructed, some buyers could miss out on the opportunity to purchase a home or have the opportunity delayed,” he said. “In the meantime, prices show no sign of decreasing.”

The price for that single-family home, on a national average, is $291,300. The location of said home, though, influences the cost quite a bit. 

Topeka, Kansas, for example, has an average house price of $147,000, while Springfield, Illinois, comes in at $153,000. 

On the other end of the spectrum, tech hot-bed San Jose, California, comes in at an average house value of $1.05 million. 

It is notable that the most expensive areas, like San Jose, Honolulu, San Francisco and San Diego, all saw lower percentage increases than the national average. 

Higher density areas, such as New York City and  Washington, D.C., saw a lower amount of buyer activity compared to smaller, more spread out cities.