Did you know that in 2020, the United States housing market gained a staggering $2.5 trillion in value? That brings the total worth of the US housing market to a whopping $36.2 trillion.
All that shows how, despite the pandemic’s impact, US consumers still valued homeownership.
However, those figures are only the tip of the iceberg when it comes to US real estate market statistics.
To that end, we created this guide rounding up several other vital stats every US home buyer needs to know. Be sure to read on, as they may help you decide if it’s time you become a homeowner this 2021 yourself.
1. Two Million New Homeowners in 2020
At the end of 2020, the US housing market boasted 82.8 million owner-occupied homes. This indicates an increase of 2.1 million in the number of homeowners from the previous year. Thanks to these new homeowners, the total homeownership rate in 2020 went up by 2.6%.
2. California Holds the Biggest Slice of the Pie
The Golden State alone accounts for 21.4% or over a fifth of the entire nation’s housing market. What’s more, California’s housing units have a total combined value of $7.76 trillion. That’s about 2.75 times bigger than the total value of New York’s housing market and 3.5 times more than Florida’s.
That’s an incredible feat, as New York accounts for the second-biggest slice of the housing pie. Florida ranks third, while Texas ranks fourth. All three states, in turn, have a combined market value of $7.15 trillion, so, still less than California’s.
3. The Big Apple Still Beats the City of Angels
While California has the largest housing market value, New York beats it at a local level. That’s because the Big Apple’s housing value stood at $3.132 trillion in 2020, while LA’s was only at $2.813 trillion. On the other hand, Chicago, Illinois, which ranked third, only came in at $839 billion.
4. Homeownership Rating Has Since Fallen in 2021
As the total number of households in the US has increased, so has the total housing inventory. For example, in the second quarter of 2021, the US had 141,794,000 housing units. This is an increase of more than 1.22 million housing units from the previous year.
However, owner-occupied homes in 2Q 2021 only accounted for 82.51 million units. This is a staggering 3.47 million decrease from the count the prior year. It also means there were fewer homeowner occupied houses during that quarter.
Conversely, the renting population grew by almost three million. This growth in renters implies that many folks sold their homes or opted to delay home purchases.
Research suggests that downward US real estate trends on homeownership will persist. Here’s a guide you can check to find out more about how the US homeownership rating may drop in the next few years.
5. Shortage on New Construction Homes
Since the late 1960s, home builders in the US have been constructing 1.5 million new housing units each year. This trend on new construction homes continued up to the year 2000. However, by the time 2001 rolled in, new home constructions have started to dip.
In fact, that downward pattern continued until 2020. Studies found that, on average, builders added only 1.225 million new units each year from 2001 to 2020. That’s a huge difference of about 275,000 new housing units per year, for a total 20-year deficit of 5.5 million units.
6. Skyrocketing Costs of Building Materials Compound the Problem
The fewer number of new home constructions is one of the major reasons for the US housing shortage. However, even the supplies of existing homes are down, too.
A primary culprit behind such issues is the rising cost of construction materials. For example, during the height of the 2020 pandemic, softwood lumber prices went up by over 300%. Although their cost has since dropped, it’s still 75% higher than the average back in 2019.
Metal, another critical construction material, also saw steep price increases. So much so that some hardware stores had to sell them at twice the price. What’s more, according to store owners, they barely make any profit.
However, experts project that prices will gradually decrease in the coming weeks. They remind consumers that the cost won’t go back to the same levels as before the pandemic, though.
Still, this may be good news for home shoppers, as lower material costs may mean lower home prices. It may also mean lower renovation, remodeling, or home improvement costs too.
7. Projected Increase of Close to 0.5% In Mortgage Interest Rates
In January 2021, 30-year fixed mortgage rates averaged 2.65%, a 0.02% decrease from the month before. It then went on an upward trend, peaking at 3.18% on April 01, 2021. It has since gone down to slightly over 2.7% by August.
Market experts forecast the upward trend to continue throughout the year. However, they also note that these increases will occur on a gradual scale. By the end of 2021, they predict average mortgage rates to reach 3.25%. This can mean shoppers may still be able to finance a new home purchase at a rate lower than 3%, so long as they move fast.
So, you may still have few months to secure a lower rate, judging by the current speed at which mortgage rates move. As such, if your goal is to become a new homeowner this year for less, now may be the time to apply for a mortgage.
Otherwise, you’re likely to face higher rates, making your home purchase more expensive. Remember, even just a 0.1% higher rate can translate to thousands of dollars more over the life of your mortgage. So, it’s a smart move to explore your options now before mortgages become even less affordable.
Consider Taking Advantage of the US Housing Market Now
Here’s one last fun fact about the US housing market: it’s not home to the most expensive properties in the world. In fact, the Los Angeles and New York markets are only the sixth and seventh priciest. Hong Kong is at the top, with property prices averaging $1.23 million, while LA’s is only $679,220 and NY’s is $674,500.
So, that’s something to keep in mind, and most importantly, take advantage of as a US citizen.
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