Home Prices: A Closer Look at Local Trends

With only a couple of months of available inventory and homes selling in a median of three weeks, it’s no surprise that home prices are continuing to rise across the country. In fact, home prices have continuously risen for the last 9 years, since February 2012. The median existing-home price rose to $310,800 in November; 15% more than a year earlier; 41% more than five years earlier.

Home prices definitely vary widely by area. You may have heard this mantra before: “Location, location, location.” Indeed, as data shows, homes can vary in value due to their location. Among 3,120 counties, nearly 60% of them had a median home price lower than $150K, and 37% of them had a home value in the range of $150K – $350K as of Q3 2020. However, the value of the typical home surpassed $1 million in the following five counties:

U.S. Map: Counties with a Median Home Value of $1 Million or Over

San Mateo County, CA – $1.18 million
San Francisco County, CA - $1.16 million
New York County, NY - $1.15 million
Santa Clara County, CA - $1.13 million
Nantucket County, MA - $1.06 million

Meanwhile, the following counties experienced the strongest price gains in the last 5 years. Specifically, in the following counties¹, home prices rose more than 60% since 2015. For instance, in Wise County, Texas, the median home price rose to $250,000 in the 3rd quarter of 2020 from $130,000 in 2015.

With housing demand even stronger during the pandemic, NAR is forecasting home prices to rise further by 5% in 2021.

However, mortgage rates - another important determinant of mortgage payments – have significantly declined. In fact, mortgage rates have dropped more than 1 percentage point within a year. Specifically, the 30-year fixed rate was 3.73% at the end of 2019 compared to 2.67% at the end of 2020. For instance, the monthly payment for a mortgage of $400,000 drops by $230 due to these lower rates. However, since home prices are rising, current and soon-to-be homebuyers may need to get a bigger mortgage to buy their home. After comparing the monthly mortgage payment now with that of a year earlier, housing is still more affordable in most of the counties. For instance, the monthly payment for the typical home in San Mateo County, CA is $4,280 in Q3 2020 compared to $5,130 a year earlier. Nevertheless, if home prices continue to rise at this pace, many would-be homebuyers will be priced out of the market.

The counties below had the highest reduction in the monthly mortgage payment due to the lower mortgage rates compared to a year earlier. Keep in mind that the impact of lower rates is higher in large mortgages.

The tool below shows you the typical monthly mortgage payment in 3,120 counties across the country as of now compared to a year earlier. Select a state and county to see how much the payment drops due to the low mortgage rates.