For the first time since 2011, incomes are rising at a faster pace than house values, according to recent data released by the U.S. Census Bureau and as reported by Zillow. The report shows home values rose at a 5% annual rate while incomes grew by 5.2%.
Home values and rents climbing across major metros as inventory continuously falls
According to the August Zillow Real Estate Market Reports, the Zillow Home Value Index (ZHVI) was reported at $188,100 in August. Inventory, while trending in a more positive direction than at the start of the year, still is a little reason to be concerned, the report shows. Year-over-year inventory dipped 5.4 % in August.
“The housing market is starting to smooth out ever-so-slightly, as the peak home shopping season winds down,” Zillow Chief Economist Dr. Svenja Gudell said in a statement. “This is good news for frenzied buyers tired of tight inventory, rapidly rising home prices and intense competition. Inventory, while still down nationwide and in most areas, is actually starting to rise in a handful of markets, including the Bay Area, Texas and parts of the Southwest.”
Rental rates rose 1.7% annually in the same time period, to the Zillow Rent Index (ZRI) of $1,405. Compared to this past year, rents grew over 6%.
“Rent growth has slowed considerably from just a few years ago, giving renters a chance to save enough to buy a home. But make no mistake, it’s still tough out there for buyers, especially in Western markets like Seattle, Denver and Portland that have strong job growth,” Gudell said. “Things won’t switch from a sellers’ market to a buyers’ market overnight, but conditions are starting to improve.”
Portland was home to the greatest appreciating home values, rising 14.8% year-over-year in August. Dallas-Fort Worth, Seattle, Denver and Tampa rounded out the top 5. San Francisco and San Jose have dropped out from the top five, marking a slow to their fiery housing market conditions.
Inventory on the rise
San Francisco saw a yearly increase in inventory in August by 1.8%. Its ZHVI was reported at $809,500, which has been a 6 % uptick annually. Rent increased at the same time, but at a slightly slower pace of 4.8%, which brought the ZRI to $3,406.
Nearby Los Angeles also saw an increase in inventory, but at a smaller rate of 0.6 %. In the Los Angeles-Long Beach-Anaheim metro, the ZHVI was reported at $574,600, or simply a 5.2% annual increase. Rents in the L.A. metro area increased by 4.7 % year-over-year to $2,593.
Houston also saw a boost in inventory in August, by 7.4 %. The metro has been gaining a reputation as being a softening one lately, but its year-over-year rise in ZHVI was still 7.1 % to reach $174,000. Houston rent increased 0.5%, to $1,576 in August.
Inventory increased even more in Miami, where there were 14.1% more listings in August than the same time this past year. The metro’s ZHVI was $239,300, rising 9 % annually. Rents in Miami increased 4.2% ,to $1,885 in August.
Markets with falling inventory
Buyers in New York/Northern New Jersey faced 11.5 % less inventory in August than the same time last year, and prices rose 5.2% to $574,600. Rents here are also increasing, increasing 4.7% annually to $2,593.
Chicago buyers faced an equivalent challenge. Having a ZHVI of $201,300 in August, which is 4.5 % more than last year, the real estate market in Chicago has 11.5 % less inventory than it did a year ago. Rent actually decreased 0.2% annually, to $1,643.
Head to Washington D.C., and real estate is even more challenging to find. D.C. had a reported 15 % annual decline in inventory in August. Home prices increased 2.1% in the same time frame to a ZHVI of $370,100, while rents increased 0.5% to $2,121.