Why 2020 was a record-shattering year for the US housing market

by Candyd Mendoza27 Jan 2021

The US housing market saw a whopping S2.5 trillion increase in value in 2020 – the largest gain in a single year since 2005, according to Zillow.

The full inventory of US housing is now worth $35.2 trillion. Zillow expects that to grow even bigger than last year’s $2.5 billion gain in 2021 – even with the probability of mortgage rates rising from today’s historically low levels.

“2020 was a record-breaking year for the housing market with intense competition among buyers driving up home prices,” said Zillow Economist Treh Manhertz. “While many faced financial hardships because of the pandemic, others fortunate enough to maintain stable income took a step back to contemplate what they wanted their home to be and hopped on Zillow to help find a place that filled their wish list.”

California, home to four million-dollar metros, represents 21.4% of the nation’s housing values. California homes are worth a cumulative $7.8 trillion, according to the report.

Meanwhile, North Dakota ($64 billion), Wyoming ($70 billion) and South Dakota ($72 billion), three of the least-populous states, have the smallest shares of the US housing market. Alaska was the only state that posted a decrease in housing value in 2020, down 1.8% or roughly $1.5 billion. Zillow said that the depreciation was caused by relatively low new construction levels and declining values among homes in Alaska’s top tier. 

Over the past 10 years, the total housing stock value has more than doubled in six states. Idaho showed the most improvement, gaining 149% since 2011.

Nevada (146.3%), Utah (126.2%), Arizona (116.5%), Colorado (111.6%) and Washington (108%) followed.

“Builder confidence, perhaps in reaction to the boosted demand, hit record highs and more homes are being built as a result,” Manhertz explained. “Add that together, and you see why the housing market gained more than in any year since the Great Recession.”