According to Zillow’s latest market report released on Friday, increased buyer demand due to historically low interest rates has pushed annual property value growth to its highest level since 2006.
The Zillow Home Value Index rose to $ 269,039 in December, the highest annual growth since 2006 (9.1 percent). The ZHVI also broke records for monthly growth, reaching the all-time high of December 1996 (1.1 percent ). Despite the boom in property prices, the time to market decreased to 18 days in January, beating the 46 day average for 2019 and 2020.
“Home demand has hit the metal on price hikes this winter,” said Jeff Tucker, Zillow’s senior economist, in the report. “Ordinarily we’d talk about the upcoming spring sales season, but it looks more like last summer’s sales season just never ended.”
House values rose in all 50 of the largest metropolises, with Phoenix (17.1 percent), San Jose (14.2 percent) and Austin (13.7 percent) leading the way. San Francisco (5.3 percent), Chicago (6.7 percent), and San Antonio (6.7 percent) reported the slowest increases in home value.
Tucker said the rise in property values was due to “buyers looking to secure more space and secure today’s lows,” which averaged 2.68 percent in December and 2.74 percent in January.
“[They] have to move quickly and aggressively to win in this highly competitive market, ”he said.
The tenants were not spared from the increased housing costs. The Zillow Observed Rent Index rose 0.5 percent year over year and 0.3 percent month-over-month to $ 1,721 in January.
Annual rental growth rose in most of the 35 largest metropolitan areas, with much of the profits concentrated in the Sun Belt and Midwest markets. Phoenix saw the largest increase at 8.4 percent, followed by Sacramento (7.6 percent) and Indianapolis (6.9 percent).
On the other hand, coastal tenants experienced a hiatus, with rents in San Francisco (-9.2 percent), New York (-8.8 percent), San Jose (-7.2 percent), and Boston (- 6.3 percent) decreased by more than 6 percent.
Zillow economists assume that house values will continue to rise. House values will rise by 10.1 percent by December 2021. Zillow also revised its forecast for growth in existing home sales for 2021 to 24.8 percent, an increase to 7 million sales.
Tucker said the increase was “due to improved outstanding sales volumes and home purchase applications.”
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