Last year, Americans made more money from rising house prices than their earned income. In the case of California, where Silicon Valley is located, the gap was nearly three times higher.
According to the Wall Street Journal on the 17th, the average U.S. home price, calculated by Zillow Group, the largest real estate information company in the U.S., surged 19.6% in 2021 to $321,634.
A view of Silicon Valley where Apples headquarters is located. /Reuters Yonhap News
Home prices have risen by $52,667 from 2020. Thats slightly above the $50,000 US median-income workers earned last year.
Last year is the first time since Zillow began collecting related statistics in 2000 that the increase in the national average house price exceeded the median pre-tax earnings, which reflected inflation.
The reason house prices in the United States soared last year is because the supply of houses for sale on the market has declined sharply amid strong demand due to low mortgage interest rates, resulting in a supply-demand imbalance.
The spread of telecommuting due to the novel coronavirus infection is also believed to have contributed to the rise in house prices.
The region with the largest gap between house price growth and salaries was California. The average home price in California, one of the most expensive places in the country, rose $160,000 last year, nearly three times the average workers annual income of $55,000.
In addition, house prices rose sharply in Atlanta, Dallas, and Salt Lake, while in Chicago, Washington DC, Philadelphia and Detroit, the increase in house prices fell below earned income.
As house prices continue to rise this year due to a shortage of properties, attention is focused on whether the upward trend will be halted by the Federal Reserve, the central bank of the United States, raising interest rates.
Freddie Mac, a US state-owned mortgage company, said this week that the yield on a 30-year fixed-rate mortgage stood at 4.16%, surpassing 4% for the first time in three years since May 2019.
The US mortgage rate, which set a record low of 2.65% in January last year, remained below 3% throughout the first half of last year and stayed at 3.22% until the beginning of this year.