Despite the economic challenges associated with COVID-19, home prices steadily went up in 2020, according to the CoreLogic Home Price Index.
This included an 8.2 percent year-over-year increase in November, which was the largest annual appreciation since early 2014. December numbers are set to be released next month, and the expectation is that they’ll continue to show home price growth through the end of the year.
What has contributed to this trend? In short, record-low interest rates enticed buyers who remained in a financial situation to purchase a home. However, inventory remained relatively low, as many sellers chose not to list their homes amid a pandemic. The rising demand combined with short supply left sellers in a strong position, and prices followed suit.
The rising prices do compound affordability challenges, which could push potential first-time buyers toward renting, at least until more affordable homes come onto the market.
CoreLogic expects home prices to continue to rise in 2021, though the rate of increase figures to be smaller as supply goes up and demand comes down. Potential economic stimulus checks may also help first-time buyers turn their dreams into reality.
“The housing market performed remarkably well in 2020 despite the volatile economic state,” said Frank Martell, president and CEO of CoreLogic. “While we can expect to see lingering effects of COVID-19 resurgences and subsequent shutdowns in the early months of 2021, vaccine distributions and stimulus actions should revitalize economic activity and keep home purchase demand and home price growth strong.”