From 10,000 feet, the U.S. housing market has been nothing if not predictable in 2016 – inventory has been down, home values have grown at a remarkably steady pace and sellers have largely been sitting pretty. None of these trends shifted meaningfully in August, though there are a precious few signs emerging that hint at potential changes on the horizon.
For the 49th month in a row, the median U.S. home value rose year-over-year in August, to a Zillow Home Value Index of $188,100, up 0.4 percent from July and 5.1 percent from August 2015, according to Zillow’s August Real Estate Market Report. In each month thus far in 2016, annual home value growth has been no slower than 5 percent per year, and no faster than 5.2 percent – a notable stretch of consistency.
This year’s stability in U.S. home value appreciation continues a trend that began roughly two years ago. Throughout much of 2015, home values grew in a similarly narrow range, between 4.4 percent and 4.7 percent annual growth, before accelerating into the 5 percent range at the end of last year – where it has largely stayed since. This long period of steady annual home value growth almost looks like an anomaly when seen next to the sometimes wild up and down swings experienced nationwide over the past two decades.
A potential answer for why the market has been so stable of late, as it happens so often in real estate, could boil down to location, location, location. As we’ve often said, the U.S. housing market is really nothing more than a collection of dozens of local markets, each behaving differently and with their own unique fundamentals. Some once red-hot markets, including the San Francisco Bay Area, have cooled considerably this year. Home values in the five-county San Francisco metro were growing at an 11.7 percent annual pace as recently as January; as of August, the pace had slowed to 6 percent. In the San Jose metro – the heart of Silicon Valley – annual home value appreciation slowed from 11.1 percent growth in January to 5.8 percent in August.
At the same time, home value growth in other markets – particularly in the booming Pacific Northwest – has picked up the pace. In the Seattle metro, annual home value growth has accelerated from a 10.4 percent annual pace in January to 11.3 percent in August. Just to the south, in Portland, annual home value growth has picked up from a 13.2 percent pace at the beginning of the year to 14.8 percent currently.
In 267 of the 516 total metro areas analyzed in August, home value growth has accelerated compared to January. Home value growth was slower in August compared to January in 249 markets. This relatively even distribution of markets where home value growth has picked up steam over the course of the year, and where it has trailed off, stands in marked contrast to the boom and bust years. Then, most markets largely moved in lockstep driven by …read more
From:: Finance and Economy