Home Prices Up in All Metros for Q4 2020

According to NAR, 88% of metros experienced double-digit gains.

2 MIN READ

All metro areas tracked by the National Association of Realtors (NAR) saw single-family existing home prices rise year over year during the fourth quarter of 2020. NAR’s latest quarterly report shows that 88% of the metros followed (161 metro areas) saw double-digit increases, while only 115 metro areas saw that amount of growth in the third quarter.

“The fourth quarter of 2020 presented circumstances ripe for home price increases,” said NAR chief economist Lawrence Yun. “Mortgage rates reached record lows, leading to grim inventory conditions of insufficient supply in the fourth quarter.”

The metros with the highest gains included Bridgeport, Connecticut (39.2%); Pittsfield, Massachusetts (32.2%); Atlantic City, New Jersey (30%); Naples, Florida (29.9%); Barnstable, Massachusetts (28.9%); Crestview, Florida (28.6%); Boise, Idaho (27.1%); Binghamton, New York (24.4%); Kingston, New York (24.2%); and Spokane, Washington (23.6%).

The NAR noted that destination sites such as Atlantic City, Barnstable in Cape Cod, and Naples, along with small towns within driving distance from major cities like Binghamton and Kingston in New York, all saw large price increases, indicating strong demand for vacation homes as well as affordable homes during the ongoing pandemic.

“Although tourism took a major hit overall throughout 2020, our data shows that vacation housing still did well in terms of sales,” Yun said. “Many people purchased in these areas because they found themselves with new work-from-home freedoms.”

The West region primarily made up the top 10 most expensive metros in the fourth quarter, including San Jose, California ($1.4 million); San Francisco ($1.14 million); Anaheim, California ($935,000); Honolulu ($902,500); San Diego ($740,000); Los Angeles ($688,700); Boulder, Colorado ($661,300); Seattle ($614,700); Nassau, New York ($591,600); and Boston ($579,100).

According to the NAR, the national median existing single-family home price increased 14.9% on a year-over-year basis, with all regions experiencing double-digit year-over-year growth. The Northeast saw the highest growth at 20.7%, followed by the West at 15.5%, the Midwest at 15.1%, and the South at 14%.

While sellers have benefited from these price increases in the fourth quarter, Yun said these large shifts could become detrimental to home buyers.

“The average, working family is struggling to contend with home prices that are rising much faster than income,” he said. “This sidelines a consumer from becoming an actual buyer, causing them to miss out on accumulating wealth from homeownership.”

However, he added that low mortgage rates are helping many buyers afford their mortgage payments. In the fourth quarter, a family needed an income of $49,908 to cover a 30-year fixed-rate mortgage with a 20% downpayment affordably, which is only slightly higher than the $48,960 needed in the fourth quarter of 2019. In 130 of the 183 metro areas NAR tracks, a family needed an income less than $50,000 to pay their mortgage. However, in seven metros—San Jose, San Francisco, Anaheim, Honolulu, San Diego, Los Angeles, and Boulder, a family needed more than $100,000 in income.

On average, according to the NAR, families in the fourth quarter typically spent 14.8% of their income on mortgage payments based on median family income of $84,313, assuming a 20% downpayment. The monthly mortgage payment increased to $1,040 from $1,020 a year ago, and the effective 30-year fixed mortgage rate decreased to 2.81% in the fourth quarter from 3.76% a year ago.

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