U.S. Values and Rents Continue Rise

Home values and rental prices are steadily rising, fueled by strong demand and a tight supply of available properties, a pair of reports recently showed. The solid demand drove sales growth early this year and spurred additional construction.
The Standard & Poor’s/Case-Shiller 20-city home price index climbed 5.1 percent in the 12 months that ended in August — a level many economists view as more sustainable than the sharp double-digit gains at the start of 2014.
And in September, median rents nationwide rose a seasonally adjusted 3.7 percent from a year ago, according to real estate data firm Zillow. That reflects a greater preference for renting rather than home-buying since the Great Recession, which has reduced the percentage of Americans who own homes to nearly a 48-year low of 63.7 percent.
Increases in home values continue to exceed average annual earnings, which have risen just 2.2 percent from a year ago.
“Prices are rising the fastest in markets where job growth and net migration are the strongest and inventories are the tightest,” said Mark Vitner, an economist at Wells Fargo Securities. Those same metro areas were among the leaders in the rental increases tracked by Zillow.
The housing market’s overall gains are defying the impact of a sluggish global economy. Falling commodity prices, weakened growth in China, a struggling Europe and tumult in emerging economies such as Brazil have hampered a world that is still battling its way out of the 2008 financial crisis.
Home values are rising largely because few properties are being listed for sale. The number of existing homes for sale has fallen 3.1 percent in the past 12 months. Low mortgage rates are helping would-be buyers. The average rate on a 30-year fixed mortgage fell to 3.79 percent last week, its 13th straight week below 4 percent.

Posted on October 28, 2015 at 8:59 am
Nancy Low | Category: Buyers, News, Sellers

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