Zillow: West Coast Housing Markets ‘Booming’
Home values in booming West Coast markets continue to out-appreciate the rest of the country, with home prices in Seattle and San Jose, Calif., leaving San Francisco’s housing market “in the dust,” said Zillow Inc., Seattle.
The company’s September Real Estate Market Report said U.S. home values rose by nearly 7 percent over the past year, to an average of $202,700.
Zillow Chief Economist Svenja Gudell said home values in West Coast markets are appreciating the fastest, buoyed by high demand and competition as people flood the area looking for jobs. Seattle home values rose by 12.4 percent over the past year, while San Jose home values rose by 10 percent. This is the ninth month in a row that Seattle has led the nation in home value appreciation. By contrast, former champion San Francisco home values are appreciating more slowly than the national average, at 6 percent.
“In these West Coast markets, heightened demand is being met with limited supply of homes for sale, which naturally causes prices to rise,” Gudell said. “That limited supply and high demand dynamic is a widespread phenomenon impacting high-growth metros like Seattle, as well as slower-moving markets, like Indianapolis.”
Despite these rapid price increases, Gudell dismissed assumptions about a housing bubble. “The market is reacting to basic economic laws and is behaving exactly the way we would expect it to given good overall growth, limited supply of homes for sale and decent housing affordability thanks to low mortgage interest rates,” she said.
The report said Las Vegas, Charlotte, N.C. and Orlando, Fla., also experienced sharp year over hear home values.
The report also noted the typical buyer spends just over four months searching, and nearly half of all buyers don’t get the first home on which they make an offer. Housing markets on the West Coast are exceptionally tight, but the theme of tight inventory echoes across the country.
Zillow said rental prices on the West Coast are also rising rapidly. Riverside, Calif. and Seattle reported the greatest annual rent appreciation among the 35 largest U.S. metros. In Riverside, rent is 6 percent more expensive than at this time last year and 5.5 percent more expensive in Seattle. The median rental price in the U.S. is $1,430 per month, up by 2 percent over the past year.
Tight inventory and strong demand are two factors driving up home values. Across the U.S., Zillow reported 12 percent fewer homes to choose from than a year ago. Inventory has dropped most significantly in San Jose, Seattle and San Diego over the past year. San Jose reported 60 percent fewer homes on the market than at this time last year; Seattle and San Diego reported 35 percent fewer.
