How Has the Pandemic Changed the Housing Market? 

The current housing market is very different from the one that existed five years ago, right before the COVID-19 pandemic was declared worldwide in March 2020. Since then, the number of $1 million homes has more than doubled, home values and rents have risen to all-time highs, and buyers’ preferences and methods for looking for a home have changed—possibly irreversibly. A new Zillow report revealed the trends and economic changes that have occurred in the past five years.

“A perfect cocktail of lower mortgage rates, higher savings and a growing desire for space drove housing demand to new heights during the pandemic. Just about every major market experienced price growth far above what they’d become accustomed to, resetting the financial bar for homeownership,” said Orphe Divounguy, Senior Economist at Zillow. “While the financial hurdle is higher, the home-shopping process has improved. Virtual tools are helping buyers make more informed decisions and reducing the time they spend on in-person tours.”

Home values nationwide have increased by 45.3% since February 2020, the month before the outbreak. In just five years, that is more than ten years’ worth of average growth.

U.S. Markets See Price Growth, Fluctuating Demand

Miami is the hottest market throughout that time, with rents and housing values rising faster than in any other large metro area. Since the epidemic began, Tampa and Hartford have also ranked in the top five for increases in rentals and property values.

During the pandemic, Austin’s home values experienced the most extreme fluctuations. With home prices rising 40.3% during the early pandemic frenzy in the year ending August 2021, Austin handily outperformed all other markets in terms of the strongest year-over-year rise achieved. With home values dropping 14% in the year ending July 2023, Austin also had the largest year-over-year reduction as higher mortgage rates cooled buyer demand and new construction helped relieve competition. In general, the value of homes in Austin has increased by 37.8% since February 2020.

According to Zillow’s New York City brand, StreetEasy, median asking rentals in New York City have risen 24.1% since the pandemic began, to $3,600. Rents in the Bronx increased at the highest rate of any borough (42.3%), while rents in Queens started to rise rapidly in 2022 as more tenants looked elsewhere due to growing affordability issues in Brooklyn and Manhattan.

The metro areas with the highest single-family permitting activity from January 2020 to November 2024 were:

Austin, Phoenix, and Dallas are among the high-flying markets that have now returned to earth, and several of these areas have witnessed some of the biggest price reductions in the country from their peaks. Milwaukee, San Jose, CA, Pittsburgh, New Orleans, San Diego, Birmingham, AL, San Francisco, Memphis, TN, Louisville, KY, and Baltimore, on the other hand, had the fewest single-family homes.

Builders had to adapt as increasing interest rates and higher inflation drove housing affordability to all-time lows. Just when residential mobility slowed, many new homes that had started building prior to rates spiked were finished. Builders implemented incentives including mortgage rate buy-downs to entice purchasers.

The supply of existing homes decreased as a result of homeowners who were locked into extremely cheap mortgage rates being reluctant to sell. In April 2023, owner new listings fell 35% below pre-pandemic averages. A more severe fall in homebuilding activity was avoided as buyers replaced existing homes with newly constructed homes that were easier to find.

In response to worries about affordability, builders shifted their focus to higher-density housing, building more townhomes and condominiums rather than detached single-family homes. In order to mitigate rising land and material costs and maintain affordability, they built on smaller lots and included linked dwellings.

To read the full report, including more data, charts, and methodology, click here.