According to a recent report from Zillow, annual U.S. home-value growth in April came in at 11.6% – the highest growth rate seen since 2005, when home values were booming.
“Both of these hot markets saw extreme price appreciation in a relatively short period of time, but that’s where the similarities end,” says Zillow economist Jeff Tucker.
“Unlike the combination of speculators and people spending beyond their means with non-traditional loans in 2004 and 2005, today’s home-buying demand is driven by well-qualified buyers locking in traditional, fixed-rate mortgages,” he explains. “Builders are firing on all cylinders to meet the excess demand brought by low mortgage rates and millions of Millennial buyers jockeying for limited homes, but after more than a decade of under-building, homes will remain scarce until existing homeowners feel more comfortable selling or prices rise enough to restore balance.”
This spring, homes are selling at record pace despite the enormous leaps in home values, according to Zillow. Nationally, it typically only takes seven days after listing for a seller to accept an offer, while the Midwest markets of Kansas City, Columbus and Cincinnati are seeing listings disappear in just three days.
The average U.S. home value measured by Zillow’s Home Value Index (ZHVI) reached $281,370 in April. Monthly appreciation has been growing since May, and April’s 1.3% increase over March is the largest jump in Zillow data reaching back to 1996.
Sun Belt and Mountain West markets lead major metros in annual appreciation – notably Austin (25.5%), Phoenix (20.4%) and Salt Lake City (18.3%), though 39 of the top 50 metros are seeing double-digit increases over the year. Boise, Idaho, leads the top-100 metros, with 32.5% annual value growth.
Zillow economists expect another year of intense home-value appreciation, forecasting 11.8% growth through April 2022. Existing home sales in 2021 are predicted to be 10.3% higher than in 2020.
