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U.S. home prices went through the roof in 2021

ARI SHAPIRO, HOST:

Home prices keep going through the roof. A new report out today shows nationally, they're up 19% in a single year. Bidding wars break out. Homes sell in a matter of days or even hours. NPR's Chris Arnold is following this crazy housing market.

And, Chris, have home prices ever risen this much?

CHRIS ARNOLD, BYLINE: Hey, Ari. You know, the short answer is no. This is really remarkable. And when you adjust for inflation, we have just never seen price gains like we have over the past few years. And this is data that goes back 50 years, and it's just never happened. It's also across the board. So some examples - Phoenix, prices have been - are up 32% year over year. Tampa, also in one year, prices up 28%. And in many, many smaller cities and towns all around the country, we're seeing similar really big jumps in prices.

SHAPIRO: Let's talk about what the implications of that might be. I imagine it's a great time to be a homeowner.

ARNOLD: Yeah, for sure. I talked to Leigh Dollard. She lives in Anaconda, Mont., which is a vacation destination. There's, like, mountain lakes and a ski area and bald eagles and moose. And it sounds fabulous. And a couple years ago, she bought a trailer home for $140,000. And then, after the pandemic hit, she says...

LEIGH DOLLARD: I reached out to a real estate agent friend of mine and kind of curiously said, what do you think I can get for this place? And I was very shocked at his response. I was blown away. And it sold immediately.

ARNOLD: Dollard, she says, made close to $100,000 in just a couple of years on that house. And she took that as like, whoa, you know, this is an opportunity for a big life change. So she quit her restaurant jobs. And she and her wife have bought a couple of homes. They have been fixing them up. And they're selling them. And they've been enjoying making a living that way.

SHAPIRO: On the flip side, I imagine if you're looking to buy a house, not a great time right now.

ARNOLD: Right. I mean, for a long time, first-time homebuyers, things have just been getting harder and harder. So many are getting priced out of the market. And the percentage of first-time homebuyers - that's just been falling to the lowest level in decades when you look at overall sales - what percentage of those first-time homebuyers. And one example, I talked to Steve Peterson, an economics professor at the University of Idaho, and he's been watching what's been happening there in the city of Coeur d'Alene.

STEVE PETERSON: Coeur d'Alene is in the northern part of the state, and it's in part a resort town - beautiful. It sits right on a lake. It's a rapidly growing metropolitan region.

ARNOLD: And he says five years ago, 75% of households in Coeur d'Alene could afford to buy a median-priced home there based on their income - so pretty affordable. But many cities like this have seen an influx of homebuyers - right? - people wanting second homes or buying a house and then remote working, all that on top of just people who live there or are moving there for a local job. So in five years, the median home price in Coeur d'Alene more than doubled to about half a million dollars. And so now only 25% of people, he says, who live there could afford to buy a house at today's prices.

PETERSON: The speed by which this is happening is the most remarkable part. Where housing was mostly affordable five years ago, it's mostly unaffordable today.

SHAPIRO: So what's the forecast for the year ahead, 2022?

ARNOLD: I mean, look, prices just can't keep rising this much, especially if mortgage rates go up. But a big realtor group predicts prices will keep rising at least a bit, maybe 6% next year. So that's not going to help first-time homebuyers. The underlying problem here is a shortage of homes for sale, especially starter homes. You know, some zoning changes there could help. But basically, builders need to catch up, create more supply. Until that happens, you know, this is just not going to be a normal housing market. And we don't really know how long that's going to take.

SHAPIRO: NPR's Chris Arnold, thank you.

ARNOLD: Thanks, Ari. Transcript provided by NPR, Copyright NPR.

NPR correspondent Chris Arnold is based in Boston. His reports are heard regularly on NPR's award-winning newsmagazines Morning Edition, All Things Considered, and Weekend Edition. He joined NPR in 1996 and was based in San Francisco before moving to Boston in 2001.
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