SEATTLE—Homes were worth more than ever before in 26% of U.S. housing markets, indicating those markets are close to a full recovery, according to the February Zillow® Real Estate Market Reports.
Over the past year, housing markets in the South, especially Texas and Tennessee, have joined Western housing markets blowing past their previous median home value highs. Dallas home values set a new record at $180,700 in February, up 13.7% from last February. Louisville, KY values rose 13.2% to $146,100, and Nashville home values rose 9.5% to a median of $189,100.
The national Zillow Home Value Index was $184,600 in February, 5.9% below the record median home value set in mid-2007.
The record-high prices, combined with low inventory, make it difficult to buy a home in many markets, especially for renters trying to save for a down payment amongst historically high rental costs.
Median home values in hot Western markets such as Denver and San Jose continued to zoom past previous highs with double-digit growth, but other markets have more quietly surpassed their previous peaks and continue to grow.
Many experts surveyed in the November 2015 Zillow Home Price Expectations Survey said they are concerned homes in San Francisco, Seattle, San Diego, and Los Angeles are overvalued and approaching bubble conditions.
“These new records mean we’re no longer making up ground lost during the housing recession –we’re laying a new path forward, based on demand for housing and economic growth throughout the economy” said Zillow Chief Economist Dr. Svenja Gudell. “In some markets, these new highs are a return to normalcy. The fact that other markets are still off by double digits may not mean those markets are far from being recovered. It just highlights how extraordinarily inflated home values had been during the housing bubble.”
The Zillow Rent Index continued to rise in February, but at a slower rate, as new construction provided much-needed supply to rental markets. Of the top 35 metros, only San Francisco saw double digit rent appreciation, on an annual basis, at 10.5%.
Rents are rising at 2.6% year-over-year, which is in-line with income growth expectations for the year. The Zillow Rent Forecast indicates rent will continue to slow significantly over the next year.