While rents largely stabilized in November, the acceleration of housing prices moved at its fastest clip since August 2006, according to Zillow’s year-end look at the U.S. market.
This acceleration, said Zillow’s Chief Economist Svenja Gudell, is not completely a good thing because it is due less to natural economic growth than to tight inventories that drive up prices through competition.
“As of November, there were 1,422,084 homes listed for sale nationwide,” Gudell said. That’s a 6 percent drop-off from a year ago; and inventory fell year-over-year in November in 27 of the largest 35 metros.
According to Zillow, home values rose 6.5 percent year-over-year in November, to a median $192,500. They rose half a percent from October for the 52nd consecutive month.
At the same time, rents rose 1.5 percent over the past year, as the number of homes for sale nationwide fell 5.9 for the 22nd consecutive month. Eventually, Gudell said, the crush of renters looking to buy could create even bigger demand.
Of course, not all markets in the country are shrinking. But even there, the future isn’t quite as clear as you might expect.
“Even in those markets in which inventory rose,” Gudell said, “it’s likely more because it couldn’t realistically fall much lower.”
Inventory in Las Vegas, for example, rose 26 percent year-over-year in November, to 13,659 homes for sale,” she said. “That’s a big jump, but even after that bump, Las Vegas inventory remains more than 44 percent below recent peak levels reached in mid-2011.”
In all 35 of the largest metros analyzed, she said, inventory in November was more than 25 percent below highs reached since January 2010.
Apart from inventory shortfalls, a driver for accelerating home prices has been local dynamics in the market. Or, rather, markets.
“The U.S. housing market is really just a collection of dozens of smaller local markets that are all moving up and down to varying degrees,” Gudell said. “[These markets are] driven by various local factors including the health of their local economy and local supply and demand dynamics.”
An improving national jobs picture, particularly in most large metros, have driven prices up as well, she said. Markets in which the pace of appreciation has picked up include Seattle, Detroit, Philadelphia, and Orlando. Areas growing at a slower pace include the Bay Area, Miami, Texas (Austin, Houston, and Dallas) and Denver.