The Housing Market Gained $11 Trillion in Value in the 2010’s
The combined value of every residential home in the United States is a staggering $33.6 trillion – almost equal to the combined 2018 GDPs of the U.S.A. (~$20.5 trillion) and China (~$13.6 trillion), by far the world’s two largest national economies. If all the 2,200+ billionaires in the world (as of 2018) were to pool their assets, their paltry $9.1 trillion in wealth couldn’t even buy a third of the nation’s homes.
Over the past year, between the end of 2018 and the end of 2019, the total value of every residential property in the country grew by 3.4%, or approximately $1.1 trillion – a sum higher than the entire 2018 GDP of all but 15 nations. But the real story may be in measuring the difference a decade can make: Between 2010 and the end of 2019, the total value of all U.S. homes grew 51%, or $11.3 trillion.
In 2010, the U.S. housing market was struggling to regain its footing in the wake of one of the largest economic and housing downturns on record. But a decade of economic recovery marked by low unemployment, low interest rates and a near-tripling of the Dow Jones Industrial Average contributed widespread home value growth. Of course, the U.S. housing market is really just a collection of state and regional markets, with some states and metro areas contributing more to the overall value and growth of the U.S. housing stock, and some contributing far less.
For example, California more than lives up to its moniker as the Golden State over the longer-term. Over the past decade, California’s housing stock grew in value by more than $3.1 trillion, by far the largest such growth of any single state – and comfortably more than the combined total of the next four on the list: Texas (+$886 billion), Florida (+$839 billion), Washington (+$507 billion) and New York (+$495 billion). And three of the five individual metro markets in which housing has gained the most value over the past decade are in California: Los Angeles (+$1.065 billion), San Francisco (+$872 billion), New York (+$656 billion), San Jose (+$360 billion) and Seattle (+$356 billion).
But while examining a decade’s worth of growth can offer a useful look at the big picture, it can also obscure shorter-term trends that may be having a bigger immediate impact. For a brief period between the end of 2013 and early 2014, the typical home value in California was growing at more than 20 percent per year, an incredibly rapid pace that undoubtedly contributed to the Golden State’s overall housing stock appreciation over the decade. But that kind of growth is also wildly unsustainable – by the end of 2019, annual appreciation for the typical California home had slowed to less than 2%. And that slowdown meant that in 2019 alone, California contributed far less to the nation’s overall housing wealth than its past performance might suggest.
In 2019 alone, the states with the largest individual contributions to growth in value of the U.S. housing stock were Texas (+$89 billion), California (+$77 billion), Florida (+$69 billion), Pennsylvania (+$47 billion) and Washington (+$45 billion). And in the past year, only one California metro was on the list of the five largest contributors to housing stock value gain: Washington, D.C. (+$38 billion), Phoenix ($+30 billion), Seattle (+$30 billion) Los Angeles (+$29 billion) and Dallas (+$23 billion).
There are generally two ways in which total housing value can grow: Appreciation among existing homes, and/or additions to the local housing stock itself. Roughly 86%, or $9.7 trillion, of the growth in value of the U.S. housing stock over the past decade can be attributed to the simple, steady appreciation of existing homes over this period. The remainder can be chalked up to builders adding value to the housing stock through newly built homes. In almost every individual market, a similar pattern holds true – the majority of overall housing value growth can be attributed to appreciation.
Almost, but not all: In Charlotte, the total housing stock value grew by 110% over the decade – 63% of which is attributable to added value from new homes, and 47% attributable to appreciation. A large part of growth in Austin (55% from the total 126%) over the same period can also be attributed to new housing stock added over the past 10 years.
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