The US housing market has reached a new all-time high valuation of $47 trillion, surpassing the previous record of $46.6 trillion set a year earlier, according to a report by Redfin. The report attributes the increase in home values to a shortage of inventory, with a Redfin estimate suggesting that there is a shortage of homes in more than 90 million US residential properties. The value of US homes rose by 0.4% from the previous year in June and is now 19.1% higher than two years ago.
One factor contributing to the rise in home values is the dominance of the 30-year fixed-rate mortgage, which has kept homeowners in their current homes. Many homeowners were able to secure low mortgage rates during the pandemic, and moving now would mean taking on higher rates, which has led to a limited pool of available homes for buyers.
The report also highlights that the total worth of US real estate reached a record high of $46.8 trillion in June 2023. Additionally, the number of homes for sale in the US hit an all-time low, falling 15% on an annual basis. Other findings in the report include a decline in aggregate home value in Los Angeles and a difference in home values between urban, suburban, and rural areas.
The report suggests that the winners in the current housing market are homeowners who bought before mortgage rates started to rise, as they continue to build equity. However, first-time buyers are facing challenges due to expensive borrowing costs, high home prices, and limited housing options.
Overall, the US housing market is experiencing a record high valuation due to a shortage of inventory and the influence of low mortgage rates. While this has benefited existing homeowners, it has made it more difficult for first-time buyers to enter the market.