Low-Income Renters Left Out of Pandemic Savings

Rhea-AI Summary

According to Zillow's February Market Report, home values in the U.S. rose by 1.1% to $272,446, marking the fastest monthly appreciation since 1996. Annual growth accelerated to 9.9%, with the typical home gaining $24,473 in value. However, rent growth slowed, with only a 0.5% increase year-over-year, indicating a challenging landscape for renters, especially in affordable areas. Notably, expensive markets saw significant rent declines, reflecting a shift towards homeownership during the pandemic. Mortgage rates have also risen to 2.98%, still historically low.

Positive

• U.S. home values rose 1.1% in February, reaching $272,446.
• Annual home value growth increased to 9.9%, the highest since April 2006.
• Rent growth showed signs of recovery with a 0.4% increase month-over-month for two consecutive months.

Negative

• Rents increased only 0.5% year-over-year, significantly below pre-pandemic growth rates (3.7%).
• Expensive metro areas experienced steep rent declines, with New York, for example, down 11.6% year over year.

SEATTLE, March 19, 2021 /PRNewswire/ -- Home values continued their march upward in February, matching record monthly growth from months prior, according to Zillow's February Market Report.[i] While home sales and appreciation soared over the course of the pandemic, rent growth slowed, seemingly a boost for rent affordability. However, it was often the more-expensive areas of metros that softened the most, providing little respite for renters in lower-priced areas. 

Rents have largely flatlined nationally during the pandemic and fallen significantly in several expensive markets, but the cuts did not reach all renters equally. While dropping rents could have provided relief to lower-income households who have been disproportionately impacted by the pandemic, rent has remained stubbornly high in more-affordable areas, a new Zillow® analysis shows. 

"While the pandemic has cut into demand for rental housing, that has only translated into declining rents in expensive markets, and most acutely at the top-end of those markets," said Zillow senior economist Jeff Tucker. "This past year saw widespread adoption of work-from-home policies, especially for higher-income renters who previously paid top dollar for proximity to their workplace. Demand for these rentals took a hit as many leapt into homeownership, while the flow of new renters entering these sub-markets dried up, at least temporarily."

In the New York metro area, for example, rents in wealthier neighborhoods are down 11.6% year over year, but they're up 1.8% in the least-expensive areas. In Atlanta, like many other more-affordable metros where rent has risen since last February, the increases have been biggest in the least-expensive ZIP codes, putting added financial pressures on vulnerable renters.

Rents across the U.S. are showing real signs of recovery. Typical rents grew substantially on a monthly basis for the second month in a row, posting 0.4% gains after a 0.5% rise in January, lending credence to the idea that rents have bottomed out and are on an upward swing. Still, rents are up just 0.5% year over year, well behind the 3.7% annual pace they were growing in February 2020, illustrating the long road ahead to a full pre-pandemic recovery. 

Home values continue record-setting rise
The typical U.S. home value rose 1.1% in February to $272,446, maintaining the lightning-fast speed of month-over-month growth seen in both January and December. This is the fastest monthly appreciation in Zillow records reaching back to 1996, and still above the previous high of 1% set in the summer of 2005. 

Annual home value growth across the U.S. jumped from 9.1% in January to 9.9% in February, the highest yearly appreciation since April of 2006 and an increase of $24,473 for the typical U.S. home. 

For-sale housing inventory remains lower than a year earlier, as it did throughout 2020 largely due to a fast pace of sales. Inventory fell 8% from January, and is down 30.3% year over year. 

"Home price appreciation kept up its breakneck pace in February, as a wave of early-bird shoppers competed furiously over a very limited inventory offering," said Tucker. "Monthly price growth accelerated further in most large metros in February, suggesting that buyers still have a lot of gas in the tank to keep pushing prices higher."

Mortgage rates listed by third-party lenders on Zillow rose from a monthly low of 2.58% on February 10 to 2.98% as the month ended. While the streak of record-low rates may be over, rates remain very low by historical standards -- mortgage rates ended February 2020 at 3.91%. 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.[ii]

Metropolitan Area*	Zillow Home Value Index, Feb. 2021	ZHVI - YoY Change, Feb. 2021 (%)	ZHVI - YoY Change, Feb. 2021 ($)	Zillow Observed Rent Index, Feb. 2021	ZORI - YoY Change, Feb. 2021 (%)	ZORI - YoY Change, Feb. 2021 ($)
United States	$272,446	9.9%	$24,473	$1,708	0.5%	$9
New York, NY	$520,587	8.3%	$40,102	$2,471	-9.4%	-$257
Los Angeles-Long Beach-Anaheim, CA	$761,635	9.6%	$67,020	$2,472	-0.8%	-$20
Chicago, IL	$263,185	7.6%	$18,544	$1,634	-3.0%	-$50
Dallas-Fort Worth, TX	$278,259	8.9%	$22,774	$1,519	2.2%	$32
Philadelphia, PA	$280,522	11.3%	$28,531	$1,583	2.3%	$36
Houston, TX	$235,792	8.1%	$17,684	$1,391	-0.1%	-$1
Washington, DC	$483,254	9.5%	$41,761	$1,979	-3.8%	-$79
Miami-Fort Lauderdale, FL	$326,457	7.8%	$23,738	$1,937	3.4%	$63
Atlanta, GA	$269,997	10.6%	$25,981	$1,615	6.3%	$96
Boston, MA	$545,895	10.3%	$50,802	$2,326	-5.5%	-$135
San Francisco, CA	$1,192,921	5.4%	$60,861	$2,831	-9.1%	-$285
Detroit, MI	$202,879	11.0%	$20,028	$1,276	7.3%	$87
Riverside, CA	$441,324	13.0%	$50,666	$2,137	9.5%	$186
Phoenix, AZ	$339,878	18.3%	$52,539	$1,547	8.9%	$126
Seattle, WA	$601,735	13.1%	$69,565	$1,854	-5.8%	-$115
Minneapolis-St Paul, MN	$323,661	9.0%	$26,845	$1,549	-0.2%	-$3
San Diego, CA	$702,933	14.2%	$87,664	$2,380	4.2%	$97
St. Louis, MO	$198,709	9.3%	$16,901	$1,110	3.9%	$42
Tampa, FL	$261,314	13.9%	$31,850	$1,593	7.5%	$111
Baltimore, MD	$323,406	9.2%	$27,275	$1,635	2.3%	$37
Denver, CO	$496,944	10.0%	$45,228	$1,697	0.2%	$3
Pittsburgh, PA	$179,774	10.7%	$17,425	$1,205	1.8%	$21
Portland, OR	$464,988	10.6%	$44,563	$1,628	1.4%	$22
Charlotte, NC	$273,202	11.8%	$28,865	$1,514	2.8%	$41
Sacramento, CA	$489,607	12.3%	$53,610	$1,882	7.5%	$131
San Antonio, TX	$225,999	7.9%	$16,588	$1,278	1.6%	$20
Orlando, FL	$276,596	7.7%	$19,712	$1,600	2.4%	$37
Cincinnati, OH	$211,922	13.1%	$24,564	$1,261	5.6%	$67
Cleveland, OH	$177,598	11.6%	$18,446	$1,151	4.1%	$45
Kansas City, MO	$233,102	11.7%	$24,373	$1,188	4.8%	$54
Las Vegas, NV	$320,222	8.6%	$25,339	$1,455	7.6%	$103
Columbus, OH	$237,025	11.1%	$23,593	$1,282	5.8%	$70
Indianapolis, IN	$205,859	12.2%	$22,349	$1,237	6.9%	$80
San Jose, CA	$1,325,899	12.8%	$150,961	$2,840	-8.3%	-$258
Austin, TX	$408,106	14.5%	$51,552	$1,474	-1.0%	-$15
Virginia Beach, VA	$267,161	8.8%	$21,628	$1,380	6.5%	$84
Nashville, TN	$310,812	9.6%	$27,208	$1,600	1.6%	$25
Providence, RI	$363,298	13.1%	$41,968	$1,606	9.8%	$144
Milwaukee, WI	$224,157	12.6%	$25,124	$1,230	2.8%	$33
Jacksonville, FL	$257,266	10.1%	$23,659	$1,375	6.6%	$85
Memphis, TN	$175,627	11.6%	$18,319	$1,381	9.3%	$118
Oklahoma City, OK	$171,597	8.0%	$12,696	$1,113	3.9%	$42
Louisville-Jefferson County, KY	$200,197	9.1%	$16,751	$1,072	4.4%	$45
Hartford, CT	$263,441	11.1%	$26,216	$1,423	5.3%	$71
Richmond, VA	$272,653	8.9%	$22,387	$1,295	4.1%	$51
New Orleans, LA	$226,517	8.4%	$17,476	$1,263	4.6%	$55
Buffalo, NY	$195,939	12.4%	$21,586	$1,157	6.0%	$66
Raleigh, NC	$314,170	10.2%	$29,035	$1,494	3.0%	$44
Birmingham, AL	$192,094	10.4%	$18,172	$1,140	5.0%	$54
Salt Lake City, UT	$440,100	15.1%	$57,690	$1,421	4.3%	$58

*Table ordered by market size 

About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. 

As the most-visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and nearly seamless end-to-end service. 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. Zillow recently launched Zillow Homes, Inc., a licensed brokerage entity, to streamline Zillow Offers transactions.  

Zillow Group's brands, affiliates and subsidiaries include Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes, Inc., Trulia®, Out East®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

[i] 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. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/research/data.

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

 

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SOURCE Zillow

FAQ

What is the current home value in the U.S. according to Zillow?

The typical U.S. home value is $272,446 as of February 2021.

How much did home values increase in February 2021?

Home values increased by 1.1% in February 2021.

What is the annual home value growth rate reported by Zillow?

The annual home value growth rate is 9.9% as of February 2021.

How have rents changed in New York City according to Zillow's report?

Rents in New York City decreased by 11.6% year-over-year.

What are the mortgage rates listed by Zillow at the end of February 2021?

Mortgage rates rose to 2.98% by the end of February 2021.