Home prices have been growing for some time, and they continued their “meteoric rise” in December, according to Zillow®’s latest Real Estate Market Report. According to Zillow, typical home values in the U.S. increased to $266,104, up 8.4 percent YoY and the highest annual increase since January 2014. Home value growth in the last quarter was 3.2 percent—higher than at any time since the Zillow Home Value Index series began in 1996.
Where is this growth most prominent? According to the report, the Sun Belt produced the most standouts, with Austin experiencing 5.3 percent growth over the previous quarter, while Phoenix, San Diego and Salt Lake City posted 5.1 percent increases.
“The housing market ended 2020 with an exclamation point, as home values rose sharply near the end of the year at their fastest quarterly rate on record,” said Jeff Tucker, senior economist at Zillow. “Sales are taking place at a rapid clip as momentum gathering in the market since June is still pushing forward at full force and is expected to continue for the foreseeable future. Although prices are skyrocketing, record-low mortgage rates keep bringing buyers to the table by keeping monthly payments in reach.”
The rental industry paints a different picture. Rents are up just 0.2 percent nationwide since November, now $1,740. Annually, rent growth stalled, rising just 0.8 percent year-over-year. The following markets have experienced recovery in rent prices in December: Boston (0.4 percent), Los Angeles (0.2 percent), Chicago (0.2 percent) and San Jose (0.6 percent). Meanwhile, these markets have yet to hit bottom, but rent decreases are gradually slowing, says Zillow: San Francisco (-0.6 percent), Seattle (-0.8 percent) and New York (-0.4 percent).