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Homeowners, many of whom capitalized on affordable mortgage rates prior to last year’s surge in borrowing costs, are now hesitant to forfeit these advantageous loans. Consequently, merely 1% of US homes have seen ownership change hands this year, the least in over a decade, as noted by Redfin.
Numerous homeowners are opting to stay in their current residences, as moving would entail accepting interest rates almost double their current ones. As explained by Redfin’s Economics Research Lead, Chen Zhao, this dynamic has rendered the available home inventory quite scanty. Hence, prospective buyers are finding themselves in intense competition over a limited selection of properties, a scenario that has effectively warded off a potential plummet in home values. Cities like Atlanta witnessed a significant appreciation in home value, amounting to $40.1 billion since last June, while Boston and Miami observed gains of $33.4 billion and $30.3 billion respectively.
In terms of percentage growth, the most substantial hikes were identified in markets renowned for their affordability. For instance, homes in Little Rock, Arkansas, appreciated by 8.8% compared to the previous year, and Camden, New Jersey, experienced an 8.7% escalation. Redfin suggests that the relatively modest housing costs in these regions probably amplified the demand from buyers.
However, not all metropolitan areas shared in this prosperity, as values in 32 such regions receded compared to the previous year. California’s cities bore the brunt of these devaluations, with Los Angeles experiencing the steepest drop, shedding nearly $153 billion in value. Oakland and San Francisco followed suit with decreases of approximately $86 billion and $58 billion, respectively.
This article was originally published on Quiver Quantitative
