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Last year, for the first time, U.S. homeowners gained more in value through the rise in the value of their homes than by working full-time, according to Zillow Group, which operates the Zillow online real estate brokerage.
In 2021, the average value of U.S. homes rose 19.6 percent to $321,634, a gain of $52,667, compared to the roughly $50,000 median full-time income earned by American workers, according to census bureau data Zillow cited.
Over the year, U.S. homeowners gained a total of an additional $3.2 trillion in equity, Zillow figured.
The rise in home values was caused by a variety of factors, including remote workers moving to less-expensive housing markets and outbidding locals for the best homes; and private equity companies and other investors sweeping into the real estate market and snapping up thousands of houses to then rent out (See related story in this issue).
In San Diego, one of the country’s most fevered housing markets, home values rose by $160,000, while workers’ pay averaged about $55,000, Zillow said.
The median home price in that city rose 17.5 percent to about $800,000 last year, according to Zillow data.
The cost of housing rose similarly in hot housing markets such as Atlanta, Boise, Dallas, and Salt Lake City, where wages also lagged far behind.
In Chicago, Detroit, the District of Columbia, and Philadelphia, home values rose less than the average annual paycheck.
TREND FORECAST: Will rising inflation drive up the prices of homes or lower them, despite their unaffordability? Will fewer people be able to afford buying a home?
Until the next time, at this juncture, we forecast that home prices have hit their highs.
And minus a great economic catastrophe, we do not forecast home prices significantly dropping as they did following the Panic of ’08, since many homes were bought with cash and most of the people that bought homes in this latest round could afford them.