Zillow today released its October Real Estate Market Report, which revealed the national median-priced home ($203,400) is $12,500 more valuable than it was in 2016, due to continuing inventory issues that have pushed up home values at breakneck speed.

According to the report, this is the 18th consecutive month where home values have risen by at least six percent year-over-year, double the annual rate of appreciation seen in a “normal” market.

Zillow Home Value Index

“We are in the midst of an inventory crisis that shows no signs of waning, impacting potential buyers all across the country,” said Zillow Chief Economist Dr. Svenja Gudell in a statement. “Home values are growing at a historically fast pace, and those potential buyers want to get in the market while they still can.”

Source: Zillow

San Jose, Calif. led the way in home value growth, with homes appreciating by 12.3 percent year-over-year to $1,076,400. Seattle and Las Vegas rounded out the top three with home values in those metros appreciating by 11.7 and 11.2 percent, respectively.

The home value growth in these areas is directly tied to the ongoing inventory shortage seen across the country. Overall, there is 11.7 percent fewer homes for sale in the U.S. than in October 2016, and inventory in areas with the highest median home prices, such as San Jose, San Francisco and San Diego, has withered down to depressing levels.

In San Jose, inventory has dropped by a whopping 60.4 percent, and San Francisco and San Diego have seen their inventory go down by a third.

Although the increase in home values is great for sellers looking to garner higher sales prices and build equity in their homes, it spells bad news for buyers who have been struggling to find an affordable home.

Starter homes that first-time buyers usually vie for have experienced the highest appreciation rates, with homes in the lowest price tier growing in value by 8.4 percent year-over-year. Meanwhile, values for homes in the top price tier have only appreciated by 3.7 percent.

“But with homes gaining so much value in just one year, buyers — especially first-time buyers — have to set aside more and more money for a down payment just to keep up with them,” Gudell added. “Unfortunately, there’s just not enough homes for sale, and demand will continue to drive prices higher until we reach a better balance between supply and demand.”

Email Marian McPherson.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×