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- The US residential market added $2.4 trillion in value last year, listings site Redfin said.
- Rates haven't budged far from multi-year highs and sellers are on the sidelines.
- Persistent work-from-home dynamics continue to push up values in many suburbs.
The housing market in the US added $2.4 trillion last year, jumping to $47.5 trillion.
Though housing demand has been dampened by stubbornly high mortgage rates, the total value of the market climbed by 5.3% from December 2022, preliminary data released by Redfin on Wednesday showed.
The primary driver behind the jump in values has been the "lock-in" effect as homeowners' remain reluctant to list their properties on the market to avoid giving up ultra-low mortgage rates they secured years ago. Pandemic-era mortgage rates fell below 3%, driving a frenzy of buying in 2020 and 2021.
"Prospective buyers aren't as lucky. The combination of elevated mortgage rates, high home prices and a limited pool of homes for sale means homeownership is about as unaffordable as ever. One bright spot for buyers is that mortgage rates should start declining before the end of 2024," Chen Zhao, economics research lead at Redfin, said in the note.
The data also showed that metros near New York City, such as New Jersey, witnessed a significant home value spike, while the Midwest also experienced gains due to a growing appetite for homes in more affordable areas.
"Midwestern metros like Milwaukee and Grand Rapids are experiencing home value gains for a similar reason: They're affordable, and when mortgage rates and home prices are elevated, demand for affordable homes goes up," Redfin said.
By contrast, values dip in pricier areas and pandemic boomtowns like New York, Honolulu, Riverside, and Denver, as capped demand driven by high prices has kept a lid on further upside.
Given persistent work-from-home modes in the wake of the pandemic, suburban home values outpaced gains for urban properties, while rural home values surged by 6.3% to reach $7.4 trillion, the note added.