Zillow’s entire team of economists and researchers recently delivered its Q2 2018 Housing Market Overview.
We’ve divided the report into two parts. Today, we’ll cover Home Values and Rents and Affordability.
HOME VALUES AND RENTS
Zillow’s experts tell us that home values have been steadily growing. Q2 values surpassed pre-recession highs nation-wide due to low inventories and high demand. Home values at the lower end of the market grew more quickly than home values at the top levels of the market.
Take a look at home values from 2007 forward:
- 5/07 – $200,500
- 2/12 – $148,600
- 6/18 – $217,300
You’ll note that there is a +46.2% increase in home values from trough (2012) times to current times. Home values increased at a rate of +8.3% y/y.
The Pacific Northwest, Texas, Florida and parts of the Southwest outperformed the Midwest and Mid-Atlantic regions of the country.
Zillow’s Home Value Index indicates an annual increase of +8.3% and a monthly increase of +0.5%
- Las Vegas – +15.0%
- Dallas – +11.6%
- Atlanta – +11.6%
- Seattle – +11.4%
- San Francisco – +11.0%
- Tampa – 10.9%
- Detroit – +9.7%
- Orlando – +9.7%
- Kansas City – +9.2%
- Columbus – +9.1%
Zillow’s Home Value Forecast over the Next 12 Months looks like…
– Los Angeles – +12.1%
– Detroit – +9.0%
– Boston – +8.1%
– Dallas – +7.8%
– San Francisco – +7.5%
– Tampa – +7.5%
– Seattle – +7.1%
– Chicago – +7.1%
-Atlanta – +6.9%
– New York City – +6.8%
– United States – +6.6%
– Philadelphia – +6.6%
– Minneapolis – +6.1%
– Miami – +5.4%
– St. Louis – +4.9%
– Baltimore – +4.8%
– San Diego – +4.7%
– Washington DC – +3.8%
– Phoenix – +3.7%
– Riverside – +1.7%
– Houston – +1.5%
Annual Home Value Appreciation was highest for homes in the bottom third of the market at +11.7%. Home in the middle range of the market appreciated +8.3%. Home ion the top tier of the market appreciated +5.1%
Zillow’s Rent Index slowed from the beginning of 2018 to +1.3% at $1,440/month. It has not been at this level since 2016.
Annual rent appreciation for single-family rentals ranged from +5.4% in Sacramento to Los Angeles at +2.8%. In order, Las Vegas (+4.1%), Atlanta (+3.6%), Orlando (+3.2%), Detroit (+3.1%, and Phoenix and Charlotte (+2.9%).
Zillow’s Rental Forecast for the Next 12 Months looks like…
Riverside – +3.8%
- Tampa – +2.9%
- Boston – +2.8%
- Minneapolis – +2.4%
- Los Angeles – +2.3%
Chicago, Houston, Washington DC and San Francisco rentals are all forecasted to go up less than 1%.
AFFORDABILITY
Zillow experts tell us that affordability suffering is most experienced at the bottom tier of the home market as income fails to keep pace with values and rates. Rental affordability is also worse, though slowing, than historical amounts during Q2 2018.
- The share of income spent on mortgage loans between 1985-2000 was 21%; in Q2 2018, it was 18%.
- The share of income spent on rent ibetween1985-2000 was 26%; in Q2, it was 26%.
Mortgage Affordability – share of income spent on mortgage
- Los Angeles – 45.0%
- San Francisco – 44.9%
- San Diego – 37.9%
- Seattle – 28.6%
- Riverside – 28.3%
- New York City – 27.9%
- Boston – 25.8%
- Miami – 24.9%
Rent Affordability – share of income spent on rent
Los Angeles – 46.9%
Miami – 41.5%
San Diego – 40.3%
San Francisco – 39.2%
New York City – 37.7%
Riverside – 36.8%
Boston – 32.7%
