Shortage of homes pushing up prices even higher in most expensive markets in US
A shortage of homes for sale is becoming critical in the hottest housing market in the United States where prices are rising at a fast pace, the latest index report shows.
Overall there are 10% fewer homes on the market to choose from than a year ago and up to 40% fewer in housing markets where home values are appreciating fastest, according to the report from real estate firm Zillow.
It also shows that nationally property prices increases by 6.5% in the 12 months to December 2017 to a median value of $206,300 and values in San Jose, Las Vegas, and Seattle rose the most.
In the lettings market median rents increased by 2.6% over the year, the fastest pace of appreciation since June 2016 and the fastest growth in rents is along the West Coast.
In San Jose there are 41% fewer homes on the market than a year ago and the annual percentage change in inventory has been falling at a double digit pace for the past nine months. In Las Vegas, the second fastest appreciating housing market, there are 27% fewer homes on the market than a year ago.
The number of homes for sale nationwide has declined on an annual basis for the past 35 straight months, and just 16.7 % of a panel of housing experts surveyed in December 2017expect a meaningful increase of home building in 2018, a sign that limited inventory could continue to drive the housing market this year.
‘Tight inventory fuelled by a tight labour market and low interest rates propelled home values to record heights in 2017, but the outlook is now much less certain,’ said Zillow senior economist Aaron Terrazas.
‘Tax reform will put more money in the pocket of the typical buyer, but will limit some housing-specific deductions. Overall, this should increase demand for the most affordable homes and ease competition somewhat in the priciest market segments,’ he explained.
‘On the supply side, the market is starving for new homes, but it won’t be easy for builders struggling with high and rising land, labour and lumber costs. Aging millennials and young families may be able to find more affordable new homes for sale this year, but they’ll most likely be in further flung suburbs with more gruelling commutes to urban job centres,’ he added.
Overall, the firm says that the lack of inventory, coupled with strong demand from home buyers, is one reason why home values across the country are reaching new peaks.
Median rents reached $1,439 per month with Sacramento, Riverside in California and Seattle reported the strongest rent growth over the past year, up 8%, 6% and 5% respectively year on year.
It is the sixth month in row that Sacramento has led the nation in rent appreciation, having taken the top spot from Seattle in August 2017. Though still toward the top of the national rankings, Seattle reported its slowest rent appreciation in almost t