Home prices in the United States have now overtaken the peak that was recorded as the height of the housing bubble and reached their highest vale in more than a decade.
The median home value reached $198,000 in April 2017, some 1% higher than the peak of the residential property market in 2007, according to the latest data from real estate firm Zillow.
Values across the country have now increased by 7.3% since April 2016, the strongest rate of appreciation in more than 10 years, led by Seattle, Dallas and Tampa with rises of almost 12% in Seattle and 11% in Dallas and Tampa.
The index report points out that when the housing market crashed a decade ago, home values plummeted and it has taken about 10 years for median home values to reach prior peaks. However, some markets’ median home values recovered more quickly than others.
The data shows that among the 32 largest US metros some 10 markets saw their median home value exceed prior bubble peaks more than a year ago, while 17 have yet to regain peak value.
‘Now that the typical U.S. home is worth more than ever, people may be tempted to ask if we’re in another national housing bubble. We aren’t in a bubble, and won’t be entering one anytime soon,’ said Zillow chief economist Svenja Gudell.
She explained that there are big differences between the market then and the market now. ‘Then, loose credit, speculation and overbuilding were ingredients in a recipe for disaster. Now, healthy home buyer demand is being driven largely by a stable economy and demographic tailwinds, which is exactly what we would expect in a healthy market. Supply has been slow to catch up to this demand, which is causing home values to grow at a faster clip than we might otherwise expect,’ she pointed out.
‘Beyond that, the market’s fundamentals look largely healthy. Homes are largely more affordable in most markets today than they were prior to the bust, and will remain so for the foreseeable future, even if mortgage rates rise. Americans clearly continue to see the value in homeownership, especially young Americans, which bodes well for the future,’ she added.
The Zillow report also shows that median rents increased marginally by 0.7% across the nation to $1,412 per month, led by Seattle, Sacramento and Los Angeles, up 6%, 5% and 4% respectively.
The report predicts that one of the greatest hurdles for home buyers this summer will be low inventory. There are 8% fewer homes on the market than a year ago with Minneapolis, Columbus, Ohio and Seattle reporting the greatest drop at 27% in the first two and a fall of 20% in Seattle.
