Housing In America Is On A Tear

The U.S. housing market is on a tear and not looking back.  Usually when unemployment rises and the economy slows, housing prices suffer.

Not this time.

Of course there’s nothing normal about the jump in unemployment from March and the slower economy.  The rule book on market behavior during a pandemic is still being written I suppose.

But like the stock market, the housing market apparently has it’s fingers in both ears, eyes closed, and is chanting “I can’t hear you, I can’t hear you!!”

As of July 2020, the median price of a home in America was 8.5% higher than in July 2019.  An 8.5% appreciation is nothing to sneeze at.  It’s a full 1.5% higher than the 7% that most financial calculators use to predict stock market appreciation.

 

Location Location

Obviously homes everywhere didn’t appreciate 8.5%, some places fared better than others. 

Regular readers know I’m a map dork and look far into the deep cracks and crevices of the internet to find cool mapping sites that show valuable data in unique ways.  And I’m here to show you another great find. 

Realtor.com has produced a wonderful interactive map that shows the median list price of homes in every zip code in America.  And better than that, it shows the changes in month-over-month or year-over-year increments.  Let’s take a look! 

 

They have a nifty blue to red color scale that helps you see which zip codes are hot and which are not.  The biggest year-over-year increases in median house price listings in major metro areas are in Pittsburgh, Los Angeles and Cincinnati.

You may notice the map does not have zoom buttons.  If you want to zoom, just point to where you want to go with your mouse and scroll if you’re on a computer.  If you’re on a tablet do the two-finger scroll maneuver to where you want to go.

And believe it or not there were only two major metro areas in the entire country that had a decline in median house price listings from July 2019 to July 2020.  They were Miami-Fort Lauderdale-West Palm Beach and Orlando-Kissimmee-Sanford. 

Here are the most expensive counties in America with their median home price:

• Nantucket, Massachusetts – $2,995,050
• San Mateo, California – $1,971,349
• Pitkin, Colorado – $1,937,330
• Santa Barbara, California – $1,827,499
• Marin, California – $1,738,020
• New York, New York – $1,658,028
• Santa Clara, California – $1,584,302
• San Francisco, California – $1,579,204
• Dukes, Massachusetts – $1,556,967
• Napa, California – $1,498,166

 

Free Money

One reason for the continual rise in housing prices despite the economic downturn and pandemic fears is absurdly low mortgage interest rates. 

As of the writing of this post you can get a 30 year fixed rate in some markets for 2.9%.  That’s crazy-low.  At some point you can almost call it free money. 

I remember my last refinance when I locked in a spectacular rate of 3.25%.  I thought “Well I’ll never have to do that again, they can’t possibly go too much lower, the economy would collapse”. 

Well, they keep inching lower.  It’s not worth it for me to shave off .3 of a percent because the closing costs.  But if they go down to the 2.25% range I will definitely consider another refinance. 

I’ve done three since I bought my house in 2001, and I started with a rate of 6.5%, which at that time seemed ridiculously low. 

 

Supply And Demand

Another possible reason for the continued rise in prices is the decline in newly listed properties.  Realtor.com’s July 2020 Monthly Housing Market Trends Report reveals:

…an improving but continued lack of newly listed homes on the market, coupled with pent-up buyer demand, is driving inventory to all-time lows and is also steadily pushing prices up higher. Regionally, Northeastern metros have seen the most improvement, with properties now selling more quickly than last year, an improving rate of newly listed properties, and strong price growth. 

The law of supply and demand has rare exceptions, and lack of supply seems to be a factor in many parts of the country. 

 

Anecdotally I can say that in my area there are tons of houses up for sale, but still prices continue to rise.  Bidding wars are common. 

One big reason for that is the fact that Amazon is building their second headquarters here and house prices are shooting up as a result of the 25,000 high income earners it will employ.

 

Geoarbitrage

So there you have it financial warriors, a cool mapping tool that shows the median listing price of houses in America as well as month-over-month and year-over-year changes..  

I post lots of tools like this that show various aspects of money and finance from a location perspective.  If you’re considering Geoarbitrage in the United States this mapping tool can help you find hot housing markets, or affordable ones. 

And if owning rental properties is part of your financial independence strategy, this tool can help you find hot markets and markets to avoid. 

Also be sure to check out my Geoarbitrage Resources Page that has tons of great tools to help you find your perfect location.

I hope you find these resources handy and I will continue to expose valuable tools that can help when deciding on a geoarbitrage strategy.