Home prices in the United States have now overshot the peak value existing at the height of housing bubble in 2007, with the median home value reaching $198,000 in April 2017. This is about 1% higher than the price during 2007, and the highest value reached in more than a decade, according to the latest data from real estate firm Zillow.
Home price across the country has increased by 7.3% since April 2016, registering the strongest rate of appreciation over a decade, with Seattle, Dallas and Tampa areas leading the increase in price. To be precise, Seattle has witnessed a 12% rise and Dallas and Tampa an 11% rise in prices.
The index report points out that when the housing market plummeted a decade ago, home values plunged and it has taken about a decade for median home values to attain prior peaks. Although, median home values in some of the markets were quick to recover. The data shows that among the 32 largest US metros some 10 markets saw their median home value exceed prior bubble peaks more than a year ago, while 17 have yet to regain peak value.
‘Now that the typical U.S. home is worth more than ever, people may be tempted to ask if we’re in another national housing bubble. We aren’t in a bubble, and won’t be entering one anytime soon,’ said Zillow chief economist Svenja Gudell.
She explained that times are different now for the market. ‘Then, loose credit, speculation and overbuilding were ingredients in a recipe for disaster. Now, healthy home buyer demand is being driven largely by a stable economy and demographic tailwinds, which is exactly what we would expect in a healthy market. Supply has been slow to catch up to this demand, which is causing home values to grow at a faster clip than we might otherwise expect,’ she pointed out.
‘Beyond that, the market’s fundamentals look largely healthy. Homes are largely more affordable in most markets today than they were prior to the bust, and will remain so for the foreseeable future, even if mortgage rates rise. Americans clearly continue to see the value in homeownership, especially young Americans, which bodes well for the future,’ she added.
The Zillow report also shows median rents increasing marginally by 0.7% across the country to $1,412 per month, led by Seattle, Sacramento and Los Angeles, up 6%, 5% and 4% respectively.
The report has predicted that low inventory is going to be biggest hurdle for prospective home buyers this summer. There are 8% fewer homes on the market than a year ago with Minneapolis, Columbus, Ohio and Seattle reporting the greatest drop at 27% in the first two and a fall of 20% in Seattle.