According to a report by the Joint Center for Housing Studies of Harvard University, record low home inventories in conjunction with low mortgage interest rates will most likely ensure home prices continue to rise. According to Construction Coverage, young adults, including millennials, drove much of the increase in home sales during 2020, with millennials making up the largest share of home buyers at 38%. Higher earners—those less affected by COVID-19 — accounted for higher home sales.
According to Construction Coverage, statistics from the National Association of Realtors, the median household income of first-time buyers in 2020 was $80,000; the median household income of repeat buyers was $106,700. By comparison, the median household income in 2019 was $68,703. These higher earners also typically work in industries that allow for remote work, which, in concurrence with low mortgage rates, incentivizes larger home purchases outside of urban centers.
Also according to Construction Coverage, experts identified other factors that contributed to the uptick in home buying since May 2020: delayed purchasing of homes due to the pandemic, an increased need for larger spaces to accommodate working from home and virtual schooling, a change from multi-family buildings to single-family homes to lessen exposure to the virus, and an increased ability to attend virtual home tours and close on a purchase virtually.
Researchers at Construction Coverage studied data from Zillow on the largest 95 real estate markets in the U.S. and created the following composite score of each city:
- Previous 1-year change in-home price (the percentage by which median home price increased or decreased over the last 12 months)
- Median price cut (the median percentage by which the final selling price was reduced from the original listing price)
- Median days on the market (from listing to pending)
- Projected 1-year change in-home price (the percentage by which median home price is expected to increase or decrease over the next 12 months)
The full list of top 95 hottest real estate markets of 2020 in the U.S. are as follows: