Many homeowners across the U.S. are sitting on a mountain of gold. However, even more homeowners have properties that would equate to a very small pile, rather than an impressive mountain of the precious metal. But, what they both have in common is that, mountain or molehill, the amount of gold their homes are worth is dwindling rapidly.
Gold and real estate are two types of assets that tend to be inversely correlated: when home prices are skyrocketing, gold tends to sink; conversely, if gold is reaching historic highs, then homes are likely going in the opposite direction. In the last few weeks, gold has been on a record-breaking run, reaching and then swiftly surpassing new price milestones. So, how much would your home be worth in gold right now? Are you sitting on a mountain of gold, or a molehill?
Analyzing home and gold prices in the 100 largest U.S. metros, the differences come into sharp focus. The most gold-rich homeowners would have up to 15 times more of the precious metal compared to the least lucky homeowners.
Home Worth in Gold on a Downward Slope
In 2017, U.S. real estate was shining bright — the average home was worth 250 ounces in gold. But, as the price of gold started slowly rising and then, in 2020, the Covid-19 pandemic started wreaking havoc on the economy, those 250 ounces turned into 153. The combination of a slow deceleration in home prices and continued uptick in the value of gold have chipped away at that hypothetical mountain of gold, turning it into a molehill.
So, given that gold has been increasing at a breakneck pace in the past few months, how much would the average property hypothetically “weigh” in gold in 2020?
The short answer is that it depends. For example, median-priced, single-family houses in two California metros would translate into a staggering 507 to 694 ounces of gold.
At the other end of the spectrum, homeowners in the Youngstown-Warren-Boardman metro might be disappointed to see how much their homes were worth in gold. That’s because not only would their homes not transform into a mountain, but they wouldn’t even look like an impressive hill: here, single-family houses would be worth less that 50 ounces of gleaming gold.
California 2020 Gold Rush: San Francisco Has 4 Times More Gold than Houston
California remains America’s gold hub, In fact, seven of the 20 metros where the median single-family home would turn into the largest amount of gold are in the Golden State. After the gold rush that started around the middle of the nineteenth century, this precious metal still weighs heavy in the area.
The Middle Ground: Homes in 60 Metros Worth Between 95 and 175 Oz. of Gold
Gold prices accelerate higher amid fears of economic stagnation. But, that only means some homeowners’ houses of gold are shrinking, because real estate prices can’t keep up with the spikes in the price of gold.
And, while this might not be great news for homeowners, gold-rich house hunters are presented with a golden opportunity: those who actually have this amount of gold can use it to buy property in metros like Colorado Springs, CO, Chattanooga, TN or New Orleans, LA for less than 150 or 200 ounces of gold and, in some cases, even less than 100 ounces.
What’s more, these three metros — along with many of the 60 metro areas where the median single-family home is worth around 150 ounces of gold — are considered to be some of the best destinations for remote work this summer. If work-from-home becomes the new norm, work-from-anywhere could be the natural next step, so buying property in these locations might not be a bad investment.
Because real estate and gold are viewed as hedges against inflation, it makes sense that demand for both the precious metal and properties for sale are spiking. Notably, on March 15, when lockdown measures started being implemented, interest in the evolution of the price of gold tripled almost overnight. Then, another spike in Google searches for gold price was recorded on August 5, when the price of gold surpassed $2,000 per troy ounce.
Homes Worth Less Than 70 Oz. in 2 Metros
In the 20 metros where homes translated into the least amount of gold, the median single-family home was worth less than 100 ounces of precious metal. In particular, a median house in the Youngston-Warren-Boardman metro was worth less than 50 ounces.
Again, this might be a great opportunity for house hunters who can work from home to move to a place where real estate is more affordable. St. Louis, MO and Tulsa, OK are just two of the cities where the median single-family house is worth less than 100 ounces of gold. According to RENTCafé,
Tulsa is more than “OK” if you want to combine a budget-friendly urban destination with a comfy place where you can work remotely from. […] With enough Southern charm to woo even the strictest city-bound professional, Tulsa may be just what you need to quench your thirst for history, culture and sports. Plus, it has the second-fastest internet speed on the list.
If you’re curious to see how much your home would be worth in gold, use the calculator below:
For the full ranking of all of the 100 large metros included in the analysis, check out the table below. While all metros are ranked according to the amount of gold equivalent to the median single-family house, they can also be filtered and ranked according to home price or state.
To gain some perspective on real estate and gold investments, Professor Ishani Tewari from Curry College weighed in on the following questions:
Why is gold considered a “safe haven”? Why did the price of gold soar this year more than it did in the past decade and will it continue to do so?
“A safe haven is defined as an asset that is negatively correlated or uncorrelated with another asset during periods of negative market shocks. The safe-haven property of gold is closely tied to the fact that gold, as an asset, is ‘easy’ to understand. It has intrinsic value as a precious metal. Moreover, its value is not determined by future earnings or debt (like a stock or bond would be). These features are especially attractive during turbulent times, when asset values become murky.
In an uncertain financial environment, gold can offer investors a sense of security. Gold prices skyrocketed during the inflationary periods of the late 1970s and also during the 2008-2009 Financial Crisis.
Interestingly, right now, gold prices are actually moving in the same direction as equities! This is mainly due to the very low prevailing real (inflation-adjusted) interest rates which are driving down real bond yields. The “opportunity cost” of holding of gold has fallen. Gold-holding investors are not missing out on any lucrative movement in bond and other yield-based markets. So why not hold on to gold?”
- The study includes the 100 largest U.S. metros, ranked according to the amount of gold that could be bought with the price of a median single-family house in the area.
- Single-family house prices used in the study sourced from NAR; 2020 values represent median single-family house price for Q1 2020, indexed for the following months.
- The average gold price sourced from FRED.
- The gold price for 2020 calculations in the study used values from Friday, August 14, 2020 (the day when the U.S. gave up the gold standard).
This article is intended for informational purposes only and should not be deemed as legal, financial or investment advice or solicitation of any kind. Before selling or purchasing real estate or insurance, always consult with a licensed attorney, financial advisor, insurance agent, and real estate broker.
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