U.S. home values ​​hit record $50 trillion, up 7% from last year, just in time for Fed rate cuts

The Fed’s rate hikes were supposed to slow the economy and, through rising interest rates, lower prices and make housing more affordable. not happen, and instead housing is now the least affordable in U.S. history.

And while an entire generation of potential buyers will be forced to rent indefinitely, the flip side is that anyone who was lucky enough to buy a home is celebrating on a day when real estate brokerage Redfin reports that the total value of U.S. homes has gained $3.1 trillion over the past 12 months to a record $49.6 trillion.

In percentage terms, the total value of the US housing market increased by 6.6% over the year, which is making the Fed chairman laugh in the face as he continues to raise rates in the hope of lowering prices. Looking back, the total value of U.S. homes has more than doubled over the past decade, increasing nearly 120% from $22.7 trillion in June 2014.

“The value of the U.S. housing market will likely surpass the $50 trillion threshold in the next 12 months because there are not enough homes coming up for sale to drive prices down,” said Chen Zhao, head of economic research at Redfin. “Mortgage rates have started to decline, but many sellers and potential buyers are waiting to make their move, which means we’re likely to continue to see a slow upward trend in prices.” This is great news for the millions of American homeowners who are seeing their net worth increase, but first-time buyers will continue to struggle to find affordable housing.

That is, of course, an understatement: What Zhao meant is that for millions of Americans, the dream of owning a home is now gone forever, because if they couldn’t afford to buy a home during the most aggressive rate-hike cycle since Volcker, the coming rate cuts certainly won’t make it any easier.

The number of metros where total home values ​​have topped $1 trillion has risen to eight, double the four a year ago. Anaheim, Calif., Chicago, Phoenix and Washington, D.C., join New York, Los Angeles, Atlanta and Boston in the trillion-dollar club. San Diego and Seattle appear likely to join them in the next 12 months if home values ​​continue to rise at a similar pace.

It’s worth noting that while San Francisco’s total housing value is around $700 billion, when you add in neighboring Oakland and San Jose, California, the combined San Francisco Bay Area housing market is worth nearly $2.5 trillion. Similarly, the combined Dallas ($734 million) and Fort Worth, Texas ($294 million) metropolitan areas also surpass the $1 trillion mark.

Rural home values ​​outpaced those in urban and suburban areas, rising 7% year-over-year to $7.8 trillion. Total urban home values ​​rose 6% to $10.3 trillion, while suburban home values ​​crossed the $30 trillion mark for the first time, rising 6.8% to $30.1 trillion.

There are about 57 million households in the suburbs, compared to 22 million in urban areas and 21 million in rural areas.

Thirteen major metros saw double-digit gains in total home values ​​over the past year, led by relatively affordable New Jersey metros located near New York City, where homes are more expensive. Home values ​​in New Brunswick, New Jersey, rose 13.3% to $582.6 billion, while Newark, New Jersey, climbed 13.2% to $406.2 billion. Anaheim, Calif. (up 12.1% to $1.1 trillion), Charleston, S.C. (up 11.8% to $188.9 billion) and New Haven, Conn. (up 11.8% to $91 billion) rounded out the top five metros.

Cape Coral, Florida, was the only metro to see a decline in total home values, down 1.6% to $204.2 billion. Sun Belt metros, particularly those in Texas, grew more slowly than other regions, with New Orleans (up 0.8% to $128.2 billion), Austin, Texas (up 1.9% to $392.8 billion), North Port, Florida (up 2.1% to $251.8 billion) and Fort Worth, Texas (up 2.3% to $293.7 billion) rounding out the bottom five metros.

Broken down by age group, the total value of homes owned by millennials increased 21.5% year over year to $8.6 trillion in the first quarter of 2024 (the most recent period for which generational data is available), nearly four times faster than any other generation.

This increase is partly due to the general rise in house prices, but also because millennials are now the largest generation in terms of population and have reached an age and financial situation where they represent a larger share of the home buying market. About two-thirds of mortgages taken out in 2023 were granted to buyers under the age of 45.

At the same time, the total value of homes owned by the Silent Generation fell for the fifth straight quarter, dropping 1.6% to $4.6 trillion. The value of homes owned by Baby Boomers rose 6.1% to $19 trillion, while the value of homes owned by Gen X rose 5.9% to $13.6 trillion.

Finally, Asians have once again made the best decisions, and after falling in 2022-2023, the total value of homes in majority Asian neighborhoods has rebounded over the past 12 months, increasing 9% to $1.4 trillion. This increase in value is driven by price growth in West Coast cities, where many Asian neighborhoods are located. In comparison, majority white neighborhoods saw a 6.6% increase in value, to $39.4 trillion, while majority Black neighborhoods saw a 5.4% increase in value, to $1.4 trillion. The value of homes in majority Hispanic neighborhoods increased 6.4%, to $2 trillion.

More information in the full report available here.