While numerous housing markets in the country saw minimal house price growth in 2020, Houston marked the most significant increase in house value, gaining a record $42 billion. How exactly did this metropolitan city beat key players in the industry and rise to this coveted spot? Here is an overview of Houston’s 2020 housing market.
Houston’s Housing Market Growth
According to reports by Zillow Group, homes in Houston are currently worth $533 billion. This comes as no surprise, given the region ranks fourth in the nation’s most valuable housing market index at a value of $2.1 trillion, after Florida’s 2.2 trillion, New York’s $2.8 trillion, and California’s $7.8 trillion.
In hindsight, Houston’s increase in value can be linked to the low supply of home listings, a factor rooted in the hardship from the pandemic. The low supply of homes for sale was met with high demand from home-seekers, with most offers getting multiple biddings, allowing home sellers to increase their prices. With the shortage of homes in the market, builders also jumped at the opportunity to build more homes, with the result being an increase of the U.S. full stock housing value to a value of $36.2 trillion, marking a gain of $2.5 trillion in contrast to the previous year.
In addition to the increased homes for sale demand within Houston, the low mortgage rates also contributed to the increased home value. It especially came in handy for young home buyers, with 96% of millennial investors looking to venture into real estate investments compared to their boomer counterparts, who only showed 83% interest. The highly prioritized remote working also worked in tandem with the all-time low mortgage rates, helping cement the increased need for homes for sale, which contributed to the low shortage in Houston areas.
The 2021 Market
Even with this remarkable increase in housing value, 2021 is expected to experience even bigger closing home rates with a projected increase in home value of $6.9 million. This is in part linked to the new modes of home selling that will allow buyers to view houses without necessarily visiting them, with technology allowing for even higher closing rates. Investments in features such as push notifications for new home listings will also likely drive up the competition, allowing sellers to get more value from their homes. In addition to this, indicators for future home purchases are also strong; purchase mortgage applications have risen at a rate of 22% in annual growth since May. Lastly, millennial and gen Z first-time buyers’ entry is only in its initial phases, with more purchases expected to drive up the home value.
Houston may not have taken the lead in housing value like the Dallas-Fort Worth market, which currently stands at $625 billion. Still, it certainly made for the largest leap in value over the past year, creating an impressive 8.5% overall growth. With a hopeful 2021 on the horizon, Houston is certainly one to be on the lookout for.