The US housing market hits a record value of $47 trillion as the inventory shortage fuels a price boom

The US housing market has achieved a significant milestone by reaching an unprecedented valuation of $47 trillion, as reported by Redfin. This remarkable achievement surpasses the previous record of $46.6 trillion, which was set just a year ago. The driving force behind this surge in valuation is the persistent scarcity of available properties, leading to an upward trajectory in home values. This analysis is based on a comprehensive evaluation of 90 million residences across the United States conducted by Redfin.

The constricted inventory within the US housing market has played a pivotal role in propelling its aggregate valuation to an all-time high of $46.8 trillion in June, according to findings by Redfin. This figure outshines the preceding record established in the previous year, which stood at $46.6 trillion. The report elucidates that the shortage of available homes has acted as a cornerstone for the sustained elevation of housing values. These insights are derived from Redfin’s assessment of more than 90 million residential properties within the US.

Comparing the housing market landscape to a year ago, the value of homes in the US has risen by 0.4% as of June, marking a substantial 19.1% surge over a two-year span. It is noteworthy that the housing market has effectively counterbalanced the $2.9 trillion decrease in value that transpired between June 2022 and February 2023, attributed to the escalation in mortgage rates.

According to Chen Zhao, a Redfin economist, the prevalence of the 30-year fixed-rate mortgage model in the United States has emerged as a stabilizing force for home values. The pandemic facilitated advantageous mortgage rates for numerous homeowners, offering a 3% mortgage rate for the duration of their 30-year loan term. As a consequence, these homeowners are disinclined to relocate, as doing so would entail accepting a mortgage rate twice as high. This dynamic has led to intense competition among present homebuyers within a limited housing supply, effectively preventing a decline in home values.

The report underscores that approximately 90% of homeowners with mortgages currently enjoy rates lower than 6%, notably below the near-7% benchmarks observed since the conclusion of 2022. This situation has culminated in a mere 1% turnover rate for homes in the country this year, a nadir not witnessed in at least ten years, according to Redfin.

The US housing market hits a record value of 47 trillion as the inventory shortage fuels a price boom 1

Simultaneously, the inventory of available homes in the US has plummeted to an unprecedented low in June, registering a 15% decline on an annual basis.

Additional findings from Redfin’s comprehensive analysis include:

  • – Los Angeles experiencing the most substantial decrement in aggregate home value, witnessing an annual decline of $152.6 billion in June.
  • – Properties valued between $500,000 and $750,000 exhibiting a 4.1% annual increment in worth, whereas those priced between $2 million and $5 million have experienced a 7.4% depreciation.
  • – The resilience of home values in suburban and rural areas compared to urban locales.
  • – The generational shift in market ownership, with millennials now wielding a greater share of valuation compared to the silent generation (born approximately between 1925 and 1945).

Chen Zhao remarks that the US housing market has bifurcated into winners and losers. Homeowners who secured mortgages before the ascent of rates are accruing equity despite a deceleration in homebuyer demand. Conversely, first-time buyers are grappling with the challenges of entering the market during a phase of expensive borrowing, record high home prices, and a dearth of available properties.

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