US residential prices increased almost 7% in 2016, led by Portland, Tampa and Seattle
Home prices in the United States ended 2016 up 6.8%, growing at their fastest pace of the year compared with the end of 2015, the latest index shows.
Growth slowed slightly in Portland but it remained the fastest growing in the nation, up 13.8% from December 2016 while Tampa, Seattle and Dallas saw similarly high home value growth, up nearly 12% year on year.
Hot home values characterized 2016 all the way to the end and they show no sign of slowing in 2017, according to the Zillow real estate market report, but flattening rents could take the heat off buyers who are struggling to find a home amid low inventory and give them more time to search for the right home.
The average price at the end of December was $193,800 with year on year growth recorded for 53 months in the row and the annual appreciation recorded in December was the fastest such pace since July 2006.
The report points out that after stabilizing somewhat at the end of 2015 and into the start of 2016, the annual pace of national home value appreciation has accelerated in each of the past seven months compared to the month prior.
‘Home values ended 2016 growing at their fastest pace of the year, which could be an indication of what to expect in 2017,’ said Zillow chief economist Svenja Gudell.
‘Lack of inventory will remain a major concern for home buyers this year. Especially lack of available entry level homes coupled with high demand will continue to rapidly drive up home values in the near future,’ she explained.
‘Buyers should make sure they get pre-approved for a mortgage, and be prepared to move quickly, especially in hot markets like Seattle and Portland. It’s not uncommon for buyers to make at least two offers during their home search,’ she added.
Rent appreciation stabilized at 1.5% year on year but this was less than half the pace rents were growing in the previous year. The median monthly rent payment in the US is now $1,403.
The fastest rent appreciation occurred along the West Coast. Seattle led the nation in rising rents, with rents growing 8.4% in December, followed by Portland and Sacramento.
However, inventory is still a concern for home buyers across the country and the report says that finding an affordable home is the top concern for people searching for a property.
Indeed, there are 4.6% fewer available homes than there were a year ago. Among the nation’s largest markets, Boston and Minneapolis saw the biggest declines in inventory over the past year.