If there's one thing that the nation's priciest and least-expensive housing markets share, it's that they're hot right now.
The National Association of Realtors (NAR) today released its first-quarter 2021 report on median area prices and affordability, saying that 99% of the 183 metro areas the trade group tracks reported price gains from the first quarter of 2020, and 89% notched double-digit gains.
The median existing single-family sales price jumped an annualized 16.2% in the quarter to $319,200, the highest since the NAR began keeping count in 1989. The Northeast saw the biggest quarterly YOY jump at 22.1%, followed by the West at 18%, the South at 15%, and the Midwest at 14.4%.
Illinois, Ohio, Connecticut, Massachusetts towns show the range
The NAR said that last year at this time, when inventory better matched demand, 46 out of 181, or 25%, of the metro areas it was tracking saw double-digit median price increases from the same quarter in 2019, compared with 163 out of 183 this time around, for 89%.
Further evidence of the breadth of this unprecedented price escalation: The median sales prices for the 11 metro areas with the biggest jumps range from Decatur, Illinois (up 27.5% to $102,400) and depressed-for-decades Youngstown, Ohio, (27.7%, to $119,500) to relatively prosperous Bridgeport-Stamford-Norwalk, Connecticut (34.3%, to $580,400) and Barnstable Town, Massachusetts (33.1%, to $567,000).
(The latter is regularly included in articles about communities attracting big-city dwellers looking for a new, attractive place to work from home.)
The other 7 of the 11 hottest metro markets as defined by the NAR in this report are:
- Kingston, New York (35.5%; $303,100)
- Atlantic City-Hammonton, New Jersey (34%; $277,200)
- Boise City-Nampa, Idaho (32.8%; $422,600)
- Sherman-Denison, Texas (29.8%; $234,800)
- Elmira, New York (29.1%; $126,900)
- Austin-Round Rock, Texas (28.2%; $437,900)
- Glens Falls, New York (27.5%; $214,600)
That median price inflation also was strong in the nation's priciest markets. At the top of the price range, the median price of a single-family home in the San Jose-Sunnyvale-Santa Clara, California, market rose 11.1% to $1.5 million year over year. Two other California markets also now top the $1 million median price mark: San Francisco-Oakland-Hayward ($1.2 million; 21.8%) and Anaheim-Santa Ana-Irvine ($1 million; 14.3%).
Rounding out the most-expensive list are:
- Honolulu ($940,400; 19.2%)
- San Diego-Carlsbad, California ($763,500; 14%)
- Boulder, Colorado ($726,600; 16.7%)
- Los Angeles-Long Beach-Glendale, California ($682,400; 15.1%)
- Seattle-Tacoma-Bellevue, Washington ($653,400; 17.9%)
- Naples-Immokalee-Marco Island, Florida ($599,500; 24.9%)
- Long Island's Nassau County-Suffolk County, New York ($598,600; 22.7%)
NAR says affordability concerns just continue to mount
Affordability concerns are growing along with prices. NAR researchers also found that the average national monthly mortgage payment rose 7.2% in a year, from $995 in the first quarter of 2020 to $1,067 in the first quarter of 2021.
NAR chief economist Lawrence Yun said in a press release: "The sudden price appreciation is impacting affordability, especially among first-time homebuyers. With low inventory already impacting the market, added skyrocketing costs have left many families facing the reality of being priced out entirely."
The report's findings highlight the need for more housing supply, Yun said, noting that building inventory through new construction or converting unused retail and hotel space could help. (The NAR just released a report on that topic: "Case Studies on Repurposing Vacant Hotels/Motels into Multifamily Housing."
The Millionacres bottom line
Low mortgage rates and all those reasons the pandemic has given people to move are driving demand that's far outstripping what's now record-low supply, making it tougher for residential real estate investors to find good deals without casting ever-wider nets. But more markets are proving promising.
"The record-high home prices are happening across nearly all markets, big and small, even in those metros that have long been considered off the radar in prior years for many home seekers," Yun said.
The idea of converting moribund retail and hotel space to living quarters also is something that investors can explore, and with price acceleration reaching deep into nearly every American market, there could be a lot of opportunity out there for those with a sharp eye and the wherewithal to make a deal and development happen.