If you were a homeowner in 2020, you were a big winner, thanks to fantastic home price appreciation.
Real estate analytics firm CoreLogic reported that the U.S. Home Price Index rose 9.2% in December from a year earlier, largest annual gain in more than six years.
This was primarily due to low inventory and attractive low-interest rates.
Per CoreLogic’s press release:
“The housing market exceeded expectations in 2020, closing out the year with the highest annual home price gain since February 2014 in December at 9.2%. Despite a blip in April, home-purchase demand surged as record-low mortgage rates persuaded first-time homebuyers to enter the market. Meanwhile, the consequences of the pandemic were seen in the dwindling supply of homes — dropping, on average, 24% below 2019 levels — as homeowners delayed selling.”
Key Findings from 2020
- Nationally, home prices increased 9.2% in December 2020, compared with December 2019. On a month-over-month basis, home prices increased by 1% compared to November 2020.
- December 2020 gains across all of the 10 select metropolitan areas (see table 1 below) surpassed their December 2019 levels.
- Affordability concerns continue to persist as prices continue to steeply rise. For instance, in San Diego, prices increased 10.4% year over year in December 2020 compared to the 3% gain December 2019. San Diego home prices are also forecasted to increase an additional 8.2% over the next 12 months.
- At the state level, Idaho, Indiana and Maine had the strongest price growth in December, up 19.1%, 16.1% and 15.2%, respectively.
“Two record lows are fueling home price gains: for-sale inventory and mortgage rates,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Prospective sellers with flexible timetables have opted to delay listing their home until the pandemic fades or they are vaccinated. We can expect more inventory to come available in the second half of the year, leading to slowing in price growth toward year-end.”
Home Ownership
More good news…the percentage of Americans who own a home—67.4% in the third quarter of 2020—was the highest in 12 years. In the third quarter of 2019, the rate was 64.8%.
You can find out more regarding the 2021 forecast here…
