Home values rising faster than at any time since 2005

Rhea-AI Summary

Zillow's latest Real Estate Market Report indicates significant growth in home values and sales, driven by high demand amid tight supply. In October 2020, home values increased 1% month-over-month, marking the fastest growth since 2005, with typical home values now at $262,604. The annualized rate of home sales reached 6.85 million, the highest since 2005, and is expected to maintain strong momentum into 2021. Meanwhile, rental markets are cooling, especially in coastal cities, with average rents declining by 0.1% to $1,751.

Positive

• Home values increased 1% month-over-month in October 2020, the highest rate since 2005.
• Annualized home sales reached 6.85 million in October 2020, the strongest since 2005.
• Home values rose 6.6% year-over-year in October 2020, up from 3.9% last year.

Negative

• Rental prices decreased 0.1% from September to October 2020.
• Major coastal metros, including New York and San Francisco, saw significant rent declines of 8.1% and 6.9%, respectively.

SEATTLE, Nov. 20, 2020 /PRNewswire/ -- A market defined by intense demand for relatively tight supply pushed month-over-month and quarterly home value growth to levels not seen since 2005, according to Zillow's® latest Real Estate Market Report^[1]. Rent appreciation, meanwhile, is steaming ahead in many Midwest and Sun Belt cities while declining in major coastal metros.

The high-demand market also meant more homes changed hands than at any time in the past 15 years. October's seasonally adjusted annualized rate (SAAR) of home sales was 6.85 million, according to the National Association of Realtors, which was the strongest pace since 2005. Zillow economists expect this rate to remain elevated for the coming year. It is forecasted to average 6.42 million through September 2021, which would mark the strongest year for home sales since 2006.

Home value growth accelerated from 0.9% month over month growth in September to 1% in October, the fastest rate in 15 years. That growth has only been higher -- barely -- on four occasions in the 24-year history of the Zillow Home Value Index: in June, July, August, and September of 2005. Typical home values now stand at $262,604.

"The red-hot housing market of this summer and fall is now clearly reflected in soaring home value appreciation,"  said Zillow senior economist Jeff Tucker. "We haven't seen such steep, short-term appreciation since the summer of 2005, but this time it is driven by buyers with strong credit and incomes securing affordable fixed-rate mortgages, unlike the wave of poorly-vetted, exotic mortgages that financed the last boom. The simple fact is that millions of well-qualified Millennials are seriously shopping for houses and they are competing for a shortfall of homes for sale."

In September, quarterly growth for home values reached 2.3%, then the largest increase since the summer of 2013, when the U.S. was recovering from the Great Recession. In October, quarterly growth reached 2.6%, the highest since November 2005. Home values rose 6.6% year over year last October the annual growth rate was 3.9%.

No major metro area witnessed a drop in home values from September to October. Monthly value increases ranged from 0.6% in Richmond, Va., to 1.9% in San Jose. Growth accelerated in 34 of the top 50 markets, was flat in 13, and decelerated in 3: Las Vegas, Los Angeles, and Riverside.

Strength in the for-sale market has coincided with continuing weakness in the rental market. Rent prices dropped by 0.1% from September to October to $1,751. Nationwide, typical rents are up just under 0.9% compared to October 2019. Annual growth was 3.4% in October 2019.

Yearly rent declines deepened in October in former bastions of growth, including New York (-8.1%), San Francisco (-6.9%), Boston (-5%) and San Jose (-4.2%). These cities also exhibited significant month-over-month declines in rent, along with Seattle (-1.7%), Chicago (-0.9%), and Washington, DC (-0.9%).  

Momentum in the rental market still favors Sun Belt and Midwestern cities. Among the 50 largest U.S. metros, leaders in rent growth since September were Providence, Rhode Island (2.2%), Phoenix (1.6%), Las Vegas (1.4%) and Riverside (1.3%). Year over year growth has been highest in Memphis (9.5%), Phoenix (8.2%), Riverside (8.1%), and Providence (7.5%).

Market stats from the week ending Nov. 14 show pending sales slowing late in the season, dropping 3.6% week over week, but still up a substantial 14.5% compared to 2019. Although new listings are coming online faster than they usually do in November, the decline of available inventory that began in early June continued, dropping 1.5% since the previous week to 33.3% below last year's stock.

Mortgage rates listed by third-party lenders on Zillow started the month at 2.94%, rose to 3.00% on Oct. 21, then fell to 2.76% on Oct. 27 before finishing out the month at 2.79%. Zillow's real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Group Mortgages site by third-party lenders and reflect recent changes in the market^[2].

Metropolitan Area*	Zillow Home Value Index (ZHVI), October 2020	ZHVI - YoY Change, October 2020	Total For-Sale Listings - YoY Change, Week Ending Nov. 14	Zillow Observed Rent Index (ZORI), October 2020	ZORI - YoY Change, October 2020
United States	$262,604	6.6%	-33.3%	$1,751	0.9%
New York/Newark, NY/NJ	$505,569	4.7%	-12.6%	$2,600	-8.1%
Los Angeles, CA	$726,379	7.8%	-17.5%	$2,602	0.3%
Chicago, IL	$255,532	4.3%	-25.7%	$1,685	-1.7%
Dallas-Fort Worth, TX	$271,831	5.5%	-37.3%	$1,578	1.7%
Philadelphia, PA	$269,695	7.5%	-38.2%	$1,635	1.7%
Houston, TX	$229,613	4.4%	-29.2%	$1,505	0.7%
Washington, DC	$459,656	6.4%	-30.0%	$2,068	-2.3%
Miami-Fort Lauderdale, FL	$312,574	5.5%	-13.5%	$1,938	1.7%
Atlanta, GA	$255,109	7.1%	-31.7%	$1,617	5.1%
Boston, MA	$525,223	7.0%	-25.1%	$2,313	-5.0%
San Francisco, CA	$1,126,793	5.0%	7.4%	$3,039	-6.9%
Detroit, MI	$195,270	7.1%	-41.3%	$1,320	4.5%
Riverside, CA	$411,728	8.0%	-46.5%	$2,212	8.1%
Phoenix, AZ	$315,045	12.9%	-22.8%	$1,550	8.2%
Seattle, WA	$567,205	12.4%	-20.4%	$1,916	-1.4%
Minneapolis-St. Paul, MN	$310,357	6.8%	-26.7%	$1,557	1.6%
San Diego, CA	$649,474	9.5%	-33.0%	$2,369	3.4%
St. Louis, MO	$190,720	7.0%	-33.9%	$1,171	4.3%
Tampa, FL	$240,308	9.1%	-33.7%	$1,585	5.9%
Baltimore, MD	$311,464	5.4%	-46.3%	$1,678	2.1%
Denver, CO	$468,128	6.4%	-35.1%	$1,739	0.6%
Pittsburgh, PA	$174,771	7.9%	-32.1%	$1,194	2.0%
Portland, OR	$442,464	7.4%	-34.0%	$1,681	2.2%
Charlotte, NC	$259,012	9.0%	-44.1%	$1,522	3.2%
Sacramento, CA	$458,805	8.8%	-37.2%	$1,921	6.3%
San Antonio, TX	$223,830	4.3%	-27.8%	$1,362	1.3%
Orlando, FL	$268,806	6.2%	-18.0%	$1,618	1.5%
Cincinnati, OH	$203,768	8.8%	-33.1%	$1,306	4.8%
Cleveland, OH	$168,994	9.2%	-40.0%	$1,143	3.7%
Kansas City, MO	$220,301	8.1%	-41.3%	$1,230	5.7%
Las Vegas, NV	$305,073	6.9%	-19.8%	$1,499	5.9%
Columbus, OH	$225,835	8.2%	-39.0%	$1,382	4.6%
Indianapolis, IN	$200,366	8.9%	-38.9%	$1,327	7.0%
San Jose, CA	$1,236,298	13.4%	-0.1%	$3,017	-4.2%
Austin, TX	$366,297	9.1%	-39.8%	$1,529	-0.7%
Virginia Beach, VA	$259,731	6.0%	-33.4%	$1,418	5.0%
Nashville, TN	$297,996	6.9%	-26.2%	$1,599	2.2%
Providence, RI	$342,548	8.4%	-36.9%	$1,698	7.5%
Milwaukee, WI	$202,012	9.2%	13.3%	$1,159	3.4%
Jacksonville, FL	$246,484	6.2%	-40.1%	$1,410	5.3%
Memphis, TN	$167,904	9.7%	-44.3%	$1,357	9.5%
Oklahoma City, OK	$171,213	6.6%	-41.8%	$1,106	3.3%
Louisville, KY	$192,122	7.7%	-39.2%	$1,040	5.2%
Hartford, CT	$250,566	6.5%	-41.0%	$1,438	5.4%
Richmond, VA	$261,415	5.2%	-41.2%	$1,344	3.4%
New Orleans, LA	$217,016	6.9%	-40.3%	$1,420	1.6%
Buffalo, NY	$187,090	8.6%	-44.3%	$1,161	5.0%
Raleigh, NC	$299,764	5.6%	-30.5%	$1,528	2.1%
Birmingham, AL	$184,012	8.5%	-46.4%	$1,123	4.3%
Salt Lake City, UT	$418,763	9.9%		$1,400	3.2%

*Table ordered by market size

About Zillow
Zillow, the most visited real estate website in the U.S., is building an on-demand real estate experience. Whether selling, buying, renting or financing, customers can turn to Zillow's businesses to find and get into their next home with speed, certainty and ease.

In addition to for-sale and rental listings, Zillow Offers buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase.

Millions of people visit Zillow Group sites every month to start their home search, and now they can rely on Zillow to help them finish it — with the same confidence, ease and empowerment they've come to expect from real estate's most trusted brand.

Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG).  

^[1] The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research/. The data in Zillow's Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder's office. Methodologies and all current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/research/data.

^[2] Zillow Group Marketplace, Inc. is a licensed mortgage broker, NMLS #1303160.

 

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SOURCE Zillow

FAQ

What are the current home values according to Zillow?

Zillow reports that typical home values are currently at $262,604, reflecting a 6.6% increase year-over-year.

What is the expected sales rate for homes in 2021?

Zillow economists forecast the home sales rate to average 6.42 million through September 2021.

How much did home values grow in October 2020?

Home values grew by 1% in October 2020 compared to September, marking the fastest increase in 15 years.

What was the change in rental prices in October 2020?

Rental prices fell by 0.1% from September to October 2020, with typical rents at $1,751.