US homes worth more than $200,000 for first time
The average home in the USA is now worth more than $200,000 for the first time.
New research from Zillow confirms how much the American housing market has recovered since the financial crisis, with the national median home value rising 7.5 per cent in the last year to reach $200,400.
High buyer demand coupled with fewer homes for sale is driving up home values across the country – there are 11 per cent fewer homes on the market than a year ago, the greatest drop in inventory since July 2013. National home values have been rising at over 7 per cent annually for the past five months, with many markets consistently rising in the double-digits.
“The national housing market remains red hot and shows no signs of slowing, even as some local markets like the Bay Area have noticeably cooled,” says Zillow Chief Economist Dr. Svenja Gudell. “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. 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, and find an agent who has experience with bidding wars and will help you stand out in a competitive market, especially if you’re buying for the first time.”
Home values in Seattle, Dallas and Las Vegas are rising fastest, all reporting year-over-year gains in the double-digits. In Seattle, home values are up 13 per cent year-over-year to a median home value of $447,100. Home values in Dallas and Las Vegas are up 10.5 and 10 per cent, respectively.
Median rent across the nation has been holding steady at about a 1 per cent annual gain for the past six months – the median rent across the country is now $1,422 per month, up just over 1 per cent annually. Seattle, Los Angeles and Sacramento, Calif. reported the greatest annual rent increases among the 35 largest US metros. In Seattle, rents are up 5 per cent to $2,142 per month. Median rent in Sacramento is up 4.5 per cent, and in Los Angeles, median rent has risen 4 per cent.
With employment conditions improving and mortgage rates not yet rising, despite the Fed Reserve’s hikes, demand for property is set to keep pushing prices and rents higher. Indeed, the only headwind facing the market now is lack of supply, which is weighing on sales activity in some areas.
The result is a US real estate market that has rarely been so attractive to investors: during the height of the housing bubble over a decade ago, the median US home value peaked at $196,600 but never surpassed the $200,000 threshold until now.
US house prices accelerate in the South
6th March 2017
US house prices are accelerating in the South, as Florida, Texas and Tennessee overtake the typical California markets.
According to Zillow, US home values are up 7.2 per cent in the year to January 2017, with some new growth leaders seeing annual home values leap by double-digits.
Nashville, Portland and Tampa reported the fastest year-over-year home value growth, all appreciating over 10 per cent. Orlando, Detroit, Las Vegas and Miami are also among the top 10 fastest appreciating markets, a shift away from California dominance. Home values in Nashville were up 9 per cent a year ago, but are now rising at more than 12 per cent annually, the fastest among the 40 largest US metros. San Francisco and San Jose were both among the top 10 fastest appreciating housing markets at this time last year, but today are among the slowest.
West Coast metros have been among the powerhouse markets driving overall home value growth for the past several years, with new residents flocking to tech-hubs for jobs. However, as the cost of living becomes increasingly expensive, home shoppers are having a hard time finding affordable housing in these areas – just four of the 10 fastest appreciating housing markets are in the West. Southern markets, like Nashville and Dallas, are desirable for home shoppers in search of job opportunities, reasonably priced homes and an overall good quality of life.
“We spend a lot of time focusing on the West Coast, but power-house markets exist throughout the country,” says Zillow Chief Economist Dr. Svenja Gudell. “Florida and Texas home values have grown quite a bit over the past several years, stealing the spotlight from slower moving markets like San Francisco, San Jose and Los Angeles. Slowdowns in the Bay Area, in particular, are driven by the fact that these markets are so expensive that many people can no longer realistically afford to buy there, limiting demand and reducing pressure on home values. Despite recent increases in the national pace of home value appreciation, I expect a nationwide slowdown in 2017 as some headwinds begin blowing in, including increasing mortgage rates and worsening affordability.”
US house prices climbed 7.2pc in 2016
10th February 2017
US house prices climbed 7.2 per cent in 2016, according to CoreLogic, with growth to continue at a slower rate this year.
The latest data from the firm’s Home Price Index found that house prices edged up 0.8 per cent in December 2016 compared to November, taking annual growth to a total of 7.2 per cent.
“Last year ended with a bang with home prices up over 7 per cent nationally, led largely by major metro areas,” says Anand Nallathambi, president and CEO of CoreLogic.
Prices are forecast to continue growing in 2017, although at a slower rate. This is primarily due to the increasingly unaffordable nature of property, as supply struggles to keep up with demand, exarcebated by increasing interest rates, which will also push up mortgage rates.
Nonetheless, that lack of supply will drive price rises throughout 2017, with growth pegged at 4.7 per cent year-on-year come December 2017. While January is forecast for a particularly slow start to the year (0.1 per cent), the yearly rate of growth across 2017 would still see property prices hit a new peak.
US house prices “more robust” than expected in 2016
17th January 2017
US house price growth was “more robust” than expected in 2016, although property price rises are expected to moderate this year.
Clear Capital originally forecast price growth of 3 per cent in 2016, but property values performed higher, which the firm attributes to the stronger-than-anticipated growth in some key markets in the West and South – particularly Seattle, Portland, Sacramento, and Orlando.
In November, national quarterly home price growth remained at 0.9 per cent, according to their latest figures, while annual price growth rose slightly to 5.8 per cent.
As prices across the nation continued to creep upward even in the dead of winter, Clear Capital also highlighted another key housing industry health metric: nationwide, distressed saturation fell another 0.3 per cent from the previous month, bringing the national average to 12.5 per cent – the lowest level since before the market crash.
For 2017, the country’s housing market landscape “still appears to be moderating substantially” in the face of additional interest rate increases and possible far-reaching policy changes, notes the firm; national home prices are predicted to increase by 2.4 per cent over the coming year, significantly slower than the observed growth from 2016.
“Regionally, the South, Midwest, and West all continue to hover tightly around the 1 per cent quarter-over-quarter growth mark, while the Northeast holds steady at 0.5 per cent quarter-on-quarter growth. However, the regional forecast is predicting an end to the dominating growth pattern of the West of recent years, where year-over-year growth once crested over 17 per cent in 2013. Instead, our forecast is predicting that the South will be the top performing region during 2017 with an estimated 3.5 per cent annual growth, with the Midwest close behind at an estimated 3.4% annual growth,” says Clear Capital.
“Affordability will be the name of the game over the course of 2017, as the past few years of relatively impressive price growth have pushed home prices closer to the peak levels of 2006, with several markets reaching above and beyond to all time highs,” comments Alex Villacorta, Ph.D., Vice President of Research and Analytics at Clear Capital. “The national housing market will continue to grow, albeit markedly slower than in past years… However, western growth will be greatly limited due to a widespread lack of affordability in almost all of the major markets in the region, a key reason for its tempered growth over the course of 2016. Contrastingly, the traditionally lower priced and more affordable regions of the South and Midwest will set the pace for growth over the next year.”
South takes centre stage as US house prices grow
29th November 2016
The South is starting to take centre stage, as US house price growth continues.
New figures from Clear Capital show that the South and Midwest each experienced a quarterly price growth increase of 0.1 per cent in October, bringing quarter-over-quarter growth rates to 0.9 per cent and 1 per cent respectively. While the West is outpacing the rest of the nation at 1.1 per cent QoQ growth, this is a decrease from last month’s figures, which Clear Capital suggests may signal a potential loss in momentum for the region.
Nationally, quarterly home price growth has increased slightly, up from 0.8 per cent to 0.9 per cent. Annual growth also rose to 5.5 per cent (up 0.3 per cent from the annual house price growth recorded last year). Nationwide distressed saturation rates have also fallen 0.7 per cent, from an average of 13.9 per cent to 13.2% in the last month.
“As the Western region’s long standing housing price growth dominance is beginning to fade, the South is the clear frontrunner as we begin to look forward to 2017 for top performing markets,” says Alex Villacorta, Ph.D., Vice President of Research and Analytics at Clear Capital.
Indeed, Southern markets dominated the firm’s list of top performing markets in October, accounting for 8 of the top 15. The Memphis, TN metropolitan area took the top spot on the growth charts, reporting a 2.6 per cent price increase over the last quarter.
“The region hosts several of the nation’s top-performing and most talked about metropolitan markets like Dallas, Nashville, Miami, and others. Combined with its relatively low cost of living, the region appears to be gaining popularity among home buyers, signaling a new opportunity for investors and traditional homebuyers alike as affordability remains an issue in many other markets, namely those in the West and Northeastern regions.”
“Performance in the South has been relatively impressive for 2016, as the median home price in the region has risen 5.7% since this time last year,” adds Clear Capital’s report. “Even as markets in the region continue to post impressive gains, the median price per square foot in top performing southern markets remains well under the national benchmark – for the region as a whole, an average price per square foot of $106 is almost $30 less than the national average at $135.”
US house prices near new peak
3rd November 2016
US house prices are nearing a new peak, according to new research.
US real estate’s recovery has varied from state to state in the last year, but the overall stable momentum of the market has seen property values steadily increase. According to the National Association of Realtors, existing home prices have risen year-on-year for 55 months in a row.
Now, new data suggests that the market is nearing a new peak.
Figures from Black Knight Financial Services shows that US house prices rose 0.3 per cent in August 2016 and 5.3 per cent in the year to the same month. That same annual growth has been recorded in seven of the last eight months.
As a result, the USA is now 0.7 per cent of a new national peak, with the market up over 33 per cent from its post-financial crisis trough. New York led price growth, accounting for nine of the 10 best-performing metro areas in August. Nine states saw prices dip, led by South Carolina, North Dakota, Virginia, Connecticut and Missouri, where prices fell 0.3 per cent month-on-month. House prices in nine of the USA’s 20 biggest states, and nine of the 40 largest metro areas, hit new peaks.
Bidding wars drive US house prices up at fastest rate in two years
US house prices are now rising at their fastest rate in two years, according to Zillow, as bidding wars between buyers become increasingly common.
The site’s latest report shows that property values have climbed 5.5 per cent in the year to September, taking the median value of a home to $189,400.
Portland, Dallas and Seattle reported the highest year-over-year home value appreciation among the 35 largest metros. In Portland, home values rose almost 15 per cent to a median value of $342,100. Home values in Dallas and Seattle appreciated 12 and 11 per cent respectively. For the first time, the median home value in the Seattle surpassed $400,000 and is now at $401,100.
Inventory has been falling steadily, with 4 to 6 per cent fewer homes for sale over the past several months, according to Zillow. However, the bigger driver of home prices is increased demand, with sales up substantially since 2011, despite fewer homes on the market.
“Increasingly strong demand has been contributing to dwindling inventory stocks across the nation,” comments Zillow Chief Economist Dr. Svenja Gudell. “Healthy demand for for-sale homes amidst low inventory has been driving the market, which is another sign that the housing market is recovering nicely. Buyers in the nation’s fastest moving markets can expect the search process to last a few months, as market conditions are often extremely competitive with homes selling for above asking price and receiving multiple offers.”
Bidding wars are commonplace in many housing markets across the country, says Zillow, as multiple buyers compete for the same home.
“It’s definitely a seller’s market right now, with some homes being more expensive than ever,” adds Gudell.
US house price growth stays steady, as Midwest and South enjoy summer boost
20th September 2016
US house price growth remains steady this summer, although the Midwest and South regions are enjoying a seasonal boost.
Nationally, prices edged up 0.1 per cent in August 2016, with prices up 0.8 per cent over the last quarter. This is the first time since November 2015 that national quarterly growth has broken the 0.7 per cent mark, as the summer season hits its full swing.
Indeed, activity this season has boosted quarterly regional growth in the Midwest and South. The Midwest saw the largest price increase of 0.3 percentage points from 0.5 per cent to 0.8 per cent QoQ growth, while the South and Northeast quarterly growth figures rose to 0.9 per cent and 0.3 per cent respectively. While the West is still outpacing the rest of the nation at a relatively impressive 1.2 per cent QoQ growth rate, this figure dipped 0.2 per cent month-on-month, which Clear Capital notes could be a sign that the region’s strong Spring performance is cooling down as Summer comes to a close – a phenomenon exacerbated by lack of affordable inventory and incredibly high prices in several major metro markets.
“Southern metro markets continue to dominate our list of Highest Performing Major Metro Markets this month, whereas metros from the Northeast are noticeably missing from the list,” notes Clear Capital. Indeed, the Northeast region has consistently been the slowest growing in the nation in recent quarters, with markets such as New York and Boston, which are key luxury destinations, seeing high prices that are too expensive for some buyers.
US house prices forecast to grow 5.4pc
8th September 2016
US house prices are forecast to grow by more than 5 per cent in the next year, as the country’s recovering economy continues to drive its real estate market.
The latest CoreLogic report predicts that prices will rise 5.4 per cent year-on-year in the 12 months to July 2017. The forecast follows annual growth of 6 per cent in July 2016 and monthly growth of 1.1 per cent. The positive trend is fuelled by low mortgage rates, which has encouraged demand from domestic buyers, but also by improving employment conditions, which is making more people able to purchase a home. With supply limited in much of the US, values are expected to keen on climbing.
“If mortgage rates continue to remain relatively low and job growth continues, as most forecasters expect, then home purchases are likely to rise in the coming year,” says Dr. Frank Nothaft, chief economist for CoreLogic. “The increased sales will support further price appreciation, and according to the CoreLogic Home Price Index, home prices are projected to rise about 5 percent over the next year.”
The strongest growth is in the western region, notes the firm’s report, with Denver, Portland and Seattle all seeing double-digit growth in the last year.
US house prices up for 48th month in a row
2nd September 2016
US house prices have now risen for 48 months in a row, according to Zillow.
The site’s latest house price index shows that values have risen 5 per cent in the year to July 2016, reaching an average of $187,300. As a result, prices have been consistently climbing since August 2012. Nonetheless, they remain 4.7 per cent below their 2007 peak.
Portland, Dallas and Denver reported the highest year-over-year home value appreciation among the 35 largest metros across the USA. In Portland, home values rose almost 15 per cent to a median value of $334,900, while home values in Dallas and Denver appreciated 11.9 and 11.3 per cent, respectively.
In notoriously expensive San Francisco, home values have actually been slowing down since the beginning of the year. In January, home values were up almost 12 per cent year-over-year and are now appreciating at about half that pace, up 6.6 per cent over the past year.
“The consistent rise in home values that we’ve been seeing for the past four years masks a number of region-specific trends that have taken place over the past few months,” says Zillow Chief Economist Dr. Svenja Gudell. “In most areas, the market is being driven mainly by a strong labor market and tight supply, especially among entry level homes that first time buyers are after. But some markets – especially the red-hot Pacific Northwest – are adding more jobs and attracting more residents, putting the pressure on home values and rents. The Bay Area and Southern California are still growing at a faster pace than the nation as a whole, but growth rates have come back to earth a bit after several years of rapid growth. And markets in other regions, like the Northeast, keep steadily chugging along. All housing is local, and as the local economies in individual metros ebb and flow, housing will follow suit. More than at any time since the boom and bust, we’re seeing a housing market that is driven by local fundamentals, and not by national trends.”
Rents across the country rose 2 per cent over the past year, to a Zillow Rent Index of $1,408 – this is the 47th straight month rents have appreciated.
Of the 35 largest U.S. metros, Seattle, Portland and San Francisco reported the highest year-over-year rent appreciation. In Seattle, rents rose almost 10 percent, to a median rent price of $2,052 per month, while rents in Portland rose just over 8 percent.
In San Francisco, the median rent price rose to $3,407 per month, the second highest of all U.S. metros, right after San Jose, CA. Rents in San Francisco appreciated 6 per cent over the past year.
San Francisco heading for a housing bubble?
11th December 2015
San Francisco could be headed for a housing bubble, according to experts, as properties becoming increasingly overvalued.
In fact, one-third of experts surveyed by Zillow says the market is already in a bubble, while a further 20 per cent believe the market is at risk of a bubble in the next year.
The survey, sponsored by Zillow and conducted by Pulsenomics LLCi, highlights a range of US housing markets where experts are concerned about expensive property prices.
The Bay Area is “very hot right now”, says Zillow Chief Economist Dr. Svenja Gudell, noting that “home values may actually begin to fall somewhat… as more residents are priced out amidst rising affordability concerns, especially when interest rates rise”.
“Whether those local conditions constitute a ‘bubble’ is up for debate, even among economists,” argues Gudell. “Without 20/20 hindsight, it’s difficult to identify bubbles as they’re happening.”
Some experts also said that bubble conditions are already present in Miami, Los Angeles, Houston, San Diego, and Seattle, while Boston is at “significant risk” of a bubble in the next three years.
Home values, though, are expected to gradually level off in the coming years, while general annual home price growth expected to average 3 per cent for the next five years – taking the national median home value to more than $215,000 by the end of 2020.
“The long-term outlook for U.S. home values has diminished to a three-year low, and a clear-cut consensus among the experts remains elusive, even at the national level,” comments Pulsenomics Founder Terry Loebs. “Based on the projections of the most optimistic forecasters, home values nationally will increase 4.7 per cent next year and surpass their May 2007 peak levels in April 2017.”
“The divergence of expert views regarding the existence of regional price bubbles and the path of future home values is a reminder that the U.S. housing sector has yet to fully heal more than eight years after the epic bust,” Loeb adds.
Nonetheless, though, conditions are different to the last crash – not least because so many experts are now wary of potential bubble conditions. While prices have climbed extensively in certain hotspots, tighter lending restrictions today mean that buyers are not being given loans they cannot pay back.
“There’s no real danger of a severe crash like the one we all remember from the last decade,” adds Gudell.
Affordablity, though, could be another crisis all of its own.