For the first time since 2011, incomes are rising at a faster pace than home values, according to recent data released by the U.S. Census Bureau and reported by Zillow. The report shows home values rose at a 5 percent annual rate, while incomes grew by 5.2 percentage points.
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, is still a slight cause for concern, the report shows. Year-over-year inventory dipped 5.4 percentage points 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 percentage points annually in the same time frame, to a Zillow Rent Index (ZRI) of $1,405. Compared to last year, rents grew more than 6 percentage points.
“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 highest appreciating home values, rising 14.8 percentage points year-over-year in August. Dallas-Fort Worth, Seattle, Denver and Tampa rounded out the top five. San Francisco and San Jose have dropped out of the top five, marking a slow to their fiery housing market conditions.
Inventory on the rise
San Francisco saw an annual increase in inventory in August by 1.8 percentage points. Its ZHVI was reported at $809,500, which was a 6 percentage point uptick annually. Rent increased as well, but at a slightly slower pace of 4.8 percent, which brought the ZRI to $3,406.
Nearby Los Angeles also saw an increase in inventory, but at a smaller rate of 0.6 percent. In the Los Angeles-Long Beach-Anaheim metro, the ZHVI was reported at $574,600, or a 5.2 percentage point annual increase. Rents in the L.A. metro area increased by 4.7 percent year-over-year to $2,593.
Houston also saw an increase in inventory in August, by 7.4 percentage points. The metro has been gaining a reputation as a softening one as of late, but its year-over-year rise in ZHVI was still 7.1 percentage points to reach $174,000. Houston rent increased 0.5 percentage points, to $1,576 in August.
Inventory increased even more in Miami, where there were 14.1 percent more listings in August than the same time last year. The metro’s ZHVI was $239,300, rising 9 percent annually. Rents in Miami increased 4.2 percentage points to $1,885 in August.
Markets with falling inventory
Buyers in New York/Northern New Jersey faced 11.5 percent less inventory in August than the same time last year, and prices rose 5.2 percentage points to $574,600. Rents here are also on the rise, increasing 4.7 percentage points annually to $2,593.
Chicago buyers faced a similar challenge. With a ZHVI of $201,300 in August, which is 4.5 percentage points more than last year, the real estate market in Chicago has 11.5 percent less inventory than it did last year. Rent actually decreased 0.2 percent annually, to $1,643.
Head to Washington D.C., and real estate is even more challenging to find. D.C. had a reported 15 percentage point annual decrease in inventory in August. Home prices increased 2.1 percentage points in the same time frame to a ZHVI of $370,100, while rents increased 0.5 percentage points to $2,121.
