Scotsman Guide - Neil Pierson - 25 July 2017
For the first time, U.S. median home values exceeded $200,000, increasing 7.4 percent year over year as of this past June, real estate services company Zillow reported.
The typical U.S. home is valued at $200,400 in the latest Zillow Home Value Index. The milestone is due to high demand among buyers, coupled with an 11 percent year-over-year drop in homes listed for sale. The residential market has not seen an inventory decrease that sharp since July 2013.
“The national housing market remains red hot and shows no signs of slowing, even as some local markets like the (San Francisco) Bay Area have noticeably cooled,” Zillow Chief Economist Svenja Gudell said in a news release. “But even in areas where the housing market has slowed, home values are at or very near peak levels, selection is limited, demand is high and competition is fierce.”
Multiple markets experienced heavy declines in inventory since June 2016 that were about three times as high as the national average. Markets posting inventory-level drops exceeding 30 percent year over year included San Jose, California (39.4 percent); Columbus, Ohio (32.9 percent); San Diego (32.5 percent); and Minneapolis-St. Paul (30.4 percent).
The fastest-rising home values occurred in Seattle, which saw a 13.1 percent increase year over year as of this past June, followed by Dallas-Fort Worth (10.5 percent) and Las Vegas (10.2 percent). These spikes have pushed the national median home value to a new high, surpassing the previous high of $196,600 that occurred in 2007 just prior to the recession.
The number of homes entering the sales market has stayed relatively flat over the past two years, with this past June’s figure of 561,740 newly listed homes representing a modest year-over-year jump of about 17,000 nationwide.
“Given these high costs and high competition, the most important thing you can do is get your finances in order so you know what you can comfortably afford,” Gudell said.
Relatively low interest rates for mortgage loans also may be contributing to the surge in home values. The interest rate for an average 30-year, fixed-rate loan was 3.76 percent at the end of June, according to Zillow’s real-time mortgage-rate listings, the lowest number seen since October 2016.
Rising home values also may be contributing to steady gains in the rental-housing market. Median rent prices nationwide have been growing by about 1 percent for each of the past six months and stood at $1,422 per month in June, a year-over-year increase of 1.1 percent.
Cities posting the largest annual rent increases among the country’s 35 largest metro areas were Seattle (5.4 percent); Sacramento, California (4.5 percent); and Los Angeles (4.2 percent) Rental prices dropped in 12 of the largest markets, however, most sharply in Pittsburgh, Houston and Miami. Each of those metro areas saw average rental rates drop at least 1.9 percent.