• The full U.S. housing stock gained $6.9 trillion in 2021, easily the most in a single year.

• U.S. housing has more than doubled in value over the past 10 years since the lows of the post-recession market and the corresponding building slump.

• The most-expensive third of homes account for more than 60% of the market's total value.

The total value of private residential real estate in the U.S. grew by a record $6.9 trillion in 2021, to $43.4 trillion – more than double the level from a decade ago as the market fully recovered, and then some, from its immediate, post-Great Recession lows.

The market value hit the $40 trillion mark in June, and since has been gaining an average of more than half a trillion dollars per month. These enormous gains are the result of a record-setting year for home value growth both nationally and in many local markets. The total value crossed $30 trillion just four and a half years ago, in July 2017. It crossed $20 trillion in 2004 and $10 trillion in 1994.[1]

Though 2021 started off in a fog of uncertainty around the ongoing pandemic, vaccine rollouts, and the likely trajectory of markets, it quickly became clear that the housing market was going to roar ahead. Inventory continued to tighten as many homes went under contract in a matter of days, and often for well-above their listed prices. The typical U.S. home rose in value by 19.6% last year, and not only did rapidly rising existing home values contribute to the massive gains in total value, but more new homes were built than in any year since 2007 – further contributing to the overall value of residential real estate nationwide. Areas of the sun belt were areas of especially high capital flow into housing.

At the state level, California's housing market remains the nation's most valuable, reaching $9.24 trillion in December and representing more than a fifth – 21.3% – of the national total. But California's overall growth in value of $1.38 trillion in 2021 represents "only" 20.1% of the overall national growth of $6.9 trillion – somewhat "underperforming" by about -5.5% relative to its total weight,[2] especially given the extreme growth seen in other states. Florida, for example, makes up 6.4% of the U.S. total value ($2.76 trillion) and contributed 8.3% to the year's total growth ($571 billion), over-indexing by 30.9%. Other states that pulled more than their weight relative to their contributions to the bottom line, total value of all U.S. real estate include Idaho (+64.1%), Utah (+49.2%), Montana (+46.3%), Arizona (+40.0%) and Colorado (+34.5%).

Among metropolitan areas, the New York City metro remains the country's largest real estate market by value, but by a narrowing margin. The NYC-area housing market is valued at $3.51 trillion, with the Los Angeles metro right behind at $3.27 trillion. In December 2019, NYC had a 20.5% edge over L.A., but that narrowed to 11.6% by the end of 2020 and has now fallen to just 7.4%.

Los Angeles metro contributed the most to overall growth in 2021, 6.3% of the total gains ($431 billion). They were followed by New York (5.0%), San Francisco (3.3%), San Diego (2.9%), and Phoenix (2.5%). This list is heavily influenced by the overall size of the market – a larger market means more homes means more value, all else equal – but there were some notable exceptions. Phoenix, for example, is the nation's 14th-largest metro area by population, but was in the top 5 of this list. Growth in Austin, the nation's 35th-largest metro area, matched the value added in Houston – the nation's sixth-largest metro..

More-expensive homes will also add more to the total – and some will add a lot! For example, at the time of this analysis, there were 36 homes for sale nationwide listed on Zillow for more than $20 million each or at a total of $1.42 billion. The value of those 36 homes alone would equal 0.33% of the Los Angeles metro's substantial gains in 2021, or 2% of the total housing market value of North Dakota.

All told, homes in the top third of home values represent 60.8% of the $43.4 trillion U.S. total. The middle third accounts for 26.4% and the bottom third accounts for 12.8% – in other words, the top tier of homes is worth 4.7 times the value of the bottom tier. Because of the large geographic differences in home values across the country, this is a larger spread than in most local markets. The states with the highest multiplier of top-tier home values to bottom-tier values are Hawaii (5.1x), New York (4.9x), and California (4.8x). The lowest multipliers were in Alaska (3.3x), North Dakota (3.4x), and Nevada (3.5x).

[1] While Federal Reserve Financial Accounts show it was not until 1997, this source is out of line with other sources that roughly agree on home appreciation from the mid-1990s to the early 2000s (Zillow, FHFA, S&P/Case-Shiller). The change observed in the 2001-Q1 release is especially anomalous, so here we favor the other sources in chaining estimates of total value through the 1990s.
[2] This figure is calculated as the percentage difference between a state's contribution to the total change in value between 2020 and 2021 and its share of the total value of all U.S. residential real estate. So for California, that equation looks like: (20.1% of total 2020-2021 change/21.3% of national total)-1 = -0.055.

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