As inventory remains low and demand increases, home values have reached new heights across the nation, surpassing their previous peak from July 2006, according to Zillow’s September Real Estate Market Report.
The report indicates home values rose 5.5 percent year-over-year, up from the 5.1 percent annual gain in August to a median home value of $189,400. The numbers show that prices are growing at their fastest pace in more than two years.
As the year comes to a close it looks as though this upward pricing trend is firmly entrenched and will likely continue at a slightly slower pace through September 2017. Why?
According to Zillow, the overall median number of homes listed for sale on Zillow’s website (seasonally adjusted) fell 5.9 percent from a year ago, representing the 20th straight month of annual inventory declines.
Combined with a rising demand, many markets around the nation will begin to see more competition as multiple buyers vie for the same home.
This is good news for sellers.
According to the latest data available from Zillow’s Group Consumer Housing Trends Report, the average home search now takes 4.2 months and only 46 percent of buyers get the first home they make an offer on.
That situation could get even more difficult for buyers later on in 2017 because many entering the market will be first-timers without a previous home to release back into the pool of inventory.
For homebuyers, this is a clear indicator that it might be smart to think about entering the market sooner rather than later.
Despite the low inventory, however, home sales have actually continued to rise, according to the U.S. Census Bureau. It reported that August sales of newly constructed homes were up more than 20 percent year-over-year. Likewise, the National Association of Realtors reported the number of existing homes sold in September rose 0.6 percent year-over-year.
Preliminary Zillow research shows that new listings coming into the market have remained roughly the same over the past few years, and the shrinking inventory has more to do with the increasing number of buyers entering the market.
-Andy Warren is president of Arizona homebuilder Maracay Homes, a member of the TRI Pointe Group (NYSE:TPH. Information: www.maracayhomes.com.