Home Value Growth Breaks Records as Rents Stabilize

Impressive late-year metrics set up 2021 as a banner year

- Annual rent appreciation rose from 0.7% in October to 1.1% in November, bouncing back after an eight-month trend downward

- Home values posted both the largest monthly and quarterly increases in Zillow records dating back to 1996

- Strong growth is expected in 2021 for sales, rents and home values as vaccine optimism rises and market forces remain

News provided by

Zillow

Dec 18, 2020, 08:00 ET

SEATTLE, Dec. 18, 2020 /PRNewswire/ -- Rent appreciation began to recover in November after a long slide that began in February, and home value growth soared to new heights, according to Zillow's® latest Real Estate Market Report¹. Looking forward, Zillow economists predict 2021 sales to be the strongest since 2005, for rent growth to make up for what it lost in 2020 and for home values to reach 10% year over year growth by November.

The typical U.S. rent was up 1.1% year over year in November to $1,734, after sliding from 3.9% growth in February to just 0.7% growth in October. Among the 100 largest U.S. markets, monthly rent growth was highest in Stamford, Connecticut (3.1%), Providence, Rhode Island (2.3%), and Ogden, Utah (2.1%).

Typical rents in November are in roughly the same place they began the year, rising only $4 since January as renters were particularly hard-hit by the coronavirus pandemic and resulting recession. Just recently, Gen Z renters especially began venturing back out on their own and often finding good deals, but a predicted rebound in the rental market may make those a limited-time offer.

"With a vaccine on the horizon and Gen Z continuing to graduate from college, we expect the cloud of uncertainty surrounding the pandemic to lift and demand for rental units to surge in 2021," said Zillow senior economist Chris Glynn. "Though the coming rebound in the rental market is good news for some, it will certainly put millions of renters who were hit hard by pandemic-related income loss in an even more tenuous position, and further government intervention will likely be needed to avoid a painful wave of evictions."

While the rental market appears poised to turn the corner, the for-sale market continues to have the pedal pressed firmly to the floor. Zillow's typical home value rose 1.1% from October to November and 3% over the past three months -- both of which are the largest gains on record going back to 1996.

Home values across the U.S. rose 7.5% since last year to $263,351. The largest annual increases by metro are in San Jose at 14.2%, Phoenix at 14.1% and Seattle at 13.2%.

The rapid acceleration in home values across the U.S. is driven by robust demand and diminishing inventory -- the same forces that established this sellers' market after a short spring lull.

Looking forward to next year, Zillow economists expect home values to increase by 3.6% in the three months ending February 2021 and by 10.3% from November 2020 to November 2021.

"We expect the housing market to continue its bull run from this summer and fall well into 2021," said Zillow senior economist Jeff Tucker. "This rapid price growth will be driven by the same factors that took the steering wheel in 2020: strong demographic trends, shifts in buyer preferences sparked by the pandemic, low mortgage rates, and short supply. The millennial generation is moving into their mid-30s and bringing a wave of demand from renters looking to buy their first homes."

Despite the pandemic, 2020 has been a remarkably strong year for sales. Zillow economists expect 5.7 million homes to be sold by the end of the year -- 5.9% more than were sold in 2019. Next year is forecasted to be much stronger, with 6.9 million homes expected to be sold -- the strongest year since 2005 and 21.9% more than 2020.

Mortgage rates listed by third-party lenders on Zillow started the month at 2.86%, hit monthly highs of 2.92% on Nov. 3 and Nov. 9, then reached down to monthly lows of 2.72% on Nov. 18 and Nov. 20 before finishing out the month at 2.80%. Zillow's real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Group Mortgages site by third-party lenders and reflect recent changes in the market².

Metropolitan Area*	Zillow Home Value Index (ZHVI), November 2020	ZHVI - YoY Change, November 2020	Newly Pending Listings - YoY, as of the week ending Dec. 12	Zillow Observed Rent Index (ZORI), November 2020	ZORI - YoY Change, November 2020
United States	$263,351	7.5%	18.2%	$1,734	1.1%
New York/Newark, NY/NJ	$508,140	6.0%	51.0%	$2,528	-8.3%
Los Angeles, CA	$731,024	8.6%	-4.0%	$2,579	0.3%
Chicago, IL	$256,537	5.4%	32.9%	$1,661	-2.2%
Dallas-Fort Worth, TX	$268,012	6.3%	20.3%	$1,570	2.3%
Philadelphia, PA	$271,494	8.6%	74.0%	$1,610	1.6%
Houston, TX	$227,154	5.2%	29.1%	$1,492	1.2%
Washington, DC	$467,757	7.1%	89.6%	$2,039	-2.1%
Miami-Fort Lauderdale, FL	$315,889	6.0%	22.8%	$1,935	1.9%
Atlanta, GA	$258,262	8.0%	19.4%	$1,607	5.7%
Boston, MA	$529,013	8.1%	-30.5%	$2,270	-5.4%
San Francisco, CA	$1,158,018	5.7%	73.0%	$2,985	-7.1%
Detroit, MI	$195,138	8.5%	32.1%	$1,322	4.8%
Riverside, CA	$420,573	9.3%	22.2%	$2,206	8.9%
Phoenix, AZ	$321,359	14.1%	25.4%	$1,558	8.8%
Seattle, WA	$580,462	13.2%	25.0%	$1,891	-2.2%
Minneapolis-St. Paul, MN	$313,259	7.5%	17.6%	$1,546	2.0%
San Diego, CA	$670,649	11.2%		$2,355	3.8%
St. Louis, MO	$192,869	8.0%	22.2%	$1,154	4.2%
Tampa, FL	$250,431	10.3%		$1,581	6.8%
Baltimore, MD	$314,747	6.5%	96.6%	$1,663	2.6%
Denver, CO	$474,618	7.4%	16.0%	$1,743	0.9%
Pittsburgh, PA	$174,533	8.6%	22.6%	$1,186	2.0%
Portland, OR	$449,383	8.5%	29.3%	$1,665	2.1%
Charlotte, NC	$258,213	9.3%	3.5%	$1,533	3.9%
Sacramento, CA	$466,944	9.8%	20.9%	$1,948	7.0%
San Antonio, TX	$218,583	4.9%	38.5%	$1,336	2.2%
Orlando, FL	$270,289	6.7%		$1,595	1.9%
Cincinnati, OH	$203,561	10.1%	21.1%	$1,309	5.5%
Cleveland, OH	$172,584	10.4%	14.4%	$1,140	3.5%
Kansas City, MO	$221,847	9.1%	20.8%	$1,205	5.8%
Las Vegas, NV	$310,895	7.3%	20.5%	$1,483	6.6%
Columbus, OH	$228,725	9.4%	17.8%	$1,333	5.3%
Indianapolis, IN	$199,431	9.6%	25.8%	$1,273	6.8%
San Jose, CA	$1,275,267	14.2%	3.9%	$2,958	-5.2%
Austin, TX	$368,918	11.2%	12.6%	$1,539	-0.5%
Virginia Beach, VA	$258,931	6.8%		$1,397	5.4%
Nashville, TN	$298,665	7.5%		$1,597	1.5%
Providence, RI	$347,547	9.3%	-10.3%	$1,609	8.1%
Milwaukee, WI	$207,397	10.4%		$1,213	3.1%
Jacksonville, FL	$245,567	7.3%	33.9%	$1,400	5.7%
Memphis, TN	$169,835	10.2%	17.1%	$1,320	9.7%
Oklahoma City, OK	$167,714	7.0%	30.9%	$1,103	3.7%
Louisville, KY	$193,584	8.3%	12.3%	$995	5.4%
Hartford, CT	$255,488	7.6%	44.3%	$1,391	5.1%
Richmond, VA	$261,391	6.2%		$1,330	4.6%
New Orleans, LA	$218,950	7.5%	31.9%	$1,409	1.9%
Buffalo, NY	$190,323	9.9%	1.8%	$1,123	4.4%
Raleigh, NC	$300,762	6.2%	8.7%	$1,526	3.4%
Birmingham, AL	$184,509	9.1%	60.1%	$1,104	4.4%
Salt Lake City, UT	$419,345	11.4%		$1,416	3.2%
*Table ordered by market size

¹ The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research/. The data in Zillow's Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder's office. Methodologies and all current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/research/data.

²Zillow Group Marketplace, Inc. is a licensed mortgage broker, NMLS #1303160.

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