Consistent demand and low supply have driven a record-breaking rise in home values over the past year, according to Zillow’s latest Market Report.
In April, annual value growth for a typical U.S. home was 11.6%, the highest since 2005. U.S. prices as measured in Zillow’s Home Value Index reached $281,370 in April.
In San Diego, though the value reached far higher, to $729,318, up 16.5% since 2020.
In addition, more than 45% of available homes in the region are selling above the list price, as compared to 29% in the U.S.
Here’s the price and comparison to 2020 for other California and southwestern markets:
- Riverside: $460,833, up 16.2%
- Los Angeles: $783,610, up 10.4%
- Phoenix: $355,822, up 20.4%
- Las Vegas: $330,880, up 9.4%
The rapid rise in values may recall that of the 2000s, which preceded the stock market collapse and Great Recession.
In fact, Google searches for “housing bubble” reached their highest point in nearly three years in April. Zillow economist Jeff Tucker said however that the two eras only share the “extreme price appreciation” in common.
“Unlike the combination of speculators and people spending beyond their means with non-traditional loans in 2004 and 2005, today’s home buying demand is driven by well-qualified buyers locking in traditional, fixed-rate mortgages,” he said.
The demand brought by low mortgage rates and millions of Millennial buyers jockeying for limited homes, is also driving a homebuilding boom, he added, though it is unlikely to meet the needs of the market due to a decade of slow growth in home construction.
Monthly appreciation has been growing since May 2020. Zillow called April’s 1.3% increase over March is the largest jump in their data since 1996.
Zillow economists expect another year of appreciation, forecasting 11.8% growth in home values through April 2022. Existing home sales in 2021 are predicted to be 10.3% higher than in 2020.
Rent growth is on the upswing too. Zillow noted a 1.5% monthly rise, larger than any in their data since 2014. Annual rent growth reached 3%, to put typical U.S. rents at $1,704, or $49 higher than last year.
In San Diego, rents stood at $2,344 in Zillow’s index, up nearly 7% since last year. That follows the trend in California’s expensive coastal metros, though none of those markets’ rents have returned to pre-pandemic levels.
Mortgage rates did not retreat to all-time lows in April, but they were close. Rates listed by third-party lenders on Zillow began April at a monthly high of 2.89%, dropping to 2.66% on April 22, before ending at 2.71%.