America's hottest real estate markets are padding the net worth of homeowners fortunate enough to have properties in the most exclusive zip codes.
California alone accounts for close to half of the Top 10 most valuable metro areas for owning residential property, according to the latest data from Zillow. Other red-hot locations for getting richer off real estate include New York, Florida, Texas and Massachusetts.
In fact, despite the economic devastation of the ongoing COVID-19 pandemic, in 2020 "the housing market gained more than in any year since the Great Recession," according to Zillow economist Treh Manhertz.
U.S. home values grew dramatically last year by $2.5 trillion - the most in a single year since 2005. The aggregate value of America's complete housing stock s now worth a total of $36.2 trillion. That's about $16 trillion more than all of the liquid assets on deposit or in reserve in the entire U.S. financial system, as measured by the Federal Reserve's M2 money supply data.
Wall Street Journal photo - Pacific Heights in San Francisco, CA
Manhertz from Zillow said 2020 was a record-breaking year in part because of the "intense competition among buyers driving up home prices." This gave homebuilders confidence as demand continued to rise and hit historic heights - resulting in more new homes being built in some of the hottest markets where unbuilt land is still in abundance.
"While many faced financial hardships because of the pandemic, others fortunate enough to maintain stable income took a step back to contemplate what they wanted their home to be and hopped on Zillow to help find a place that filled their wish list," Manhertz said.
Other factors driving demand: The millennial generation is "aging into prime first-time home-buying age" while mortgage rates are at record lows, Zillow noted. Additionally, as Americans have shifted to more remote working arrangements more people are reevaluating their housing options - further adding to demand.
Rounding out the 10 hottest states for housing markets were Washington in the Pacific Northwest, then New Jersey, Pennsylvania, Illinois, and Virginia. Overall, home equity continued to rise for most Americans who owned homes in 2020 - indicating that the market's positive impact on wealth is not limited only to select high-value zip codes.
Florida continues to make its long and steady recovery from the disastrous real estate market crash following the mortgage crisis and bubble burst of more than a dozen years ago.
But California - the Golden State - is really earning its nickname as that one state alone accounts for 40 percent of the most valuable metro areas in the United States: Los Angeles, San Francisco, San Jose and San Diego.
Zillow reports that the New York metro area continues to hold the most housing value - with homes there now worth $3.1 trillion in total. Not far behind is Los Angeles, with $2.8 trillion in total value, followed by San Francisco with $1.7 trillion.