Zillow: Record home values signal market is 'no longer making up ground'
- According to Zillow’s latest Real Estate Market Report, the value of homes in 26% of U.S. housing markets is at an all-time high, leading the real estate data firm to conclude that those markets are nearing a "full recovery."
- The Southern U.S., particularly Tennessee and Texas, have seen home values surpass their previous median highs, and Western markets continue to rise, some by double digits, causing some Zillow experts to be concerned that markets like Seattle, Los Angeles and San Francisco are overvalued and nearing bubbles.
- Home values rose 4.3% nationally from February 2015 to a Zillow Home Value Index of $184,000, which, in a low inventory environment, makes it hard for many — especially renters paying record-high rents — to save for a down payment and buy a home, according to Zillow.
Zillow Chief Economist Svenja Gudell said that current home values show that much of the market is no longer struggling to make up for the crash. Gudell added that although this means some markets are seeing a "return to normalcy," others still short of their pre-crash highs might also be near recovery if their homes were overvalued before the housing bust.
"These new records mean we're no longer making up ground lost during the housing recession — we're laying a new path forward, based on demand for housing and economic growth throughout the economy," she said in a release.
Zillow also reported that rents continue to rise, but a new supply of rental units has somewhat slowed the rate of increase. In fact, the real estate data company reported that San Francisco is the only market with double-digit rent increases. Zillow projected that rent growth will see a major slowdown in the next year.
Earlier this month, the Federal Reserve reported that the total value of U.S. homes in the last quarter of 2015 reached 2006 levels of $25.3 trillion, but that tight lending standards, unemployment, high debt and low credit scores were still hindering overall market demand and, therefore, recovery. According to Yahoo Finance, the continued rise of home values could solve the market's low inventory problem if they can rise high enough for homeowners to actually profit from a sale.
Follow Kim Slowey on Twitter