In the Next 12 Months, We’ll Reach Cross the $50 Trillion Threshold
Redfin reports the total value of U.S homes gained $3.1 trillion over the past 12 months to reach a record $49.6 trillion. The total value of U.S. homes has more than doubled in the past decade, climbing nearly 120% from $22.7 trillion in June 2014.
Quite simply, there are not enough homes being listed to push prices down. Home values are still being pushed higher because supply is still being outweighed by demand. Home inventory levels remain low compared to before the pandemic. Many existing owners stay put due to the rate lock-in effect. And while elevated mortgage rates are keeping many buyers on the sidelines as well, there are still enough of them to compete over a relatively small pool of homes, and that demand will continue to drive values up, says Zillow.
Luxury Home Values Rise Faster
Historically, luxury home values, consistently lag the middle of the market, in part because the pool of buyers is smaller. But Zillow shows that luxury home value increases are now outpacing typical homes. For this analysis, Zillow defines a luxury home as being in the most-valuable 5% of homes in a given region.
Luxury home values across the U.S. are 3.9% higher than a year ago. That’s faster than the 3.2% annual growth for the typical U.S. home, reports Zillow. One possible explanation is that luxury home buyers are less affected by higher mortgage rates than a typical home buyer, especially repeat buyers who saw the equity in their current home soar over the past few years. Many now have the option to pay with all cash.
Another factor is that luxury home inventory has been slower to recover than inventory overall, helping keep prices climbing. The Zillow data shows inventory in the luxury segment is up 15.7% year over year but still 46.9% below pre-pandemic norms. By comparison, total home inventory is 22.7% higher than last year and about 32.6% below pre-pandemic averages. The share of luxury listings with a price cut is climbing, says Zillow, but it is still tracking below the market as a whole due to demand versus inventory.
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