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ArlingtonReal EstateData: Region sees 22% increase from pre-COVID home values

Data: Region sees 22% increase from pre-COVID home values

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Two years into the pandemic, the U.S. housing market is virtually unrecognizable from its previous state, with nearly half the number of homes for sale, prices higher by one-third and rising, and rents hundreds of dollars more a month, Zillow’s latest monthly market report shows.

None of that has curtailed demand, with listed properties flying off the market and sales stronger than before the pandemic. And in the Washington region, while the rate of price increase has not be as large (in percentage terms) as the nation as a whole, it been significant in raw dollars.

“We’ve seen strong demand for homes and prices rising at previously unfathomable rates. A wave of Millennial and Baby Boomer buyers have depleted housing inventory that was never really replenished [following the 2007-08 recession]” said Zillow economist Nicole Bachaud.

Lack of inventory is driving these price hikes. There are roughly 730,000 houses currently for sale in the U.S., compared to 1.4 million in February 2020.

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Historically, inventory has generally bottomed out in December and then rebounded as sellers listed their houses in preparation for prime spring shopping season. This year, supply continues to dwindle into the new year. Total inventory in February is 11.9% lower than in January.

Of the 50 largest U.S. metros, those with the largest inventory deficit since 2020 are Raleigh (-69.7%), Hartford (-63%), Providence (-61.8%) and Miami (-61%). Those seeing the smallest decrease are San Francisco (-7.8%), San Jose (-17.9%) and Austin (-26.9%).

The typical U.S. home value is now $331,533, up 32.4%, or $81,000, compared to February 2020, and is 20.3% higher than last year — another in a long line of new records for annual appreciation.

In the D.C. region, year-over-year growth was 21.9 percent, according to the Zillow analysis, rising to $536,402.

That’s solid, but not as off-the-charts as areas such as Phoenix (up 55%), Tampa (50%), San Diego and Charlotte (each 44%) and Atlanta (43%).
The rate at which prices are rising is accelerating as well, with month-over-month appreciation up to 1.6 percent, up from a low of 1.2 percent in November.

“Builders are working feverishly to get new construction and move-in-ready homes on the market, but it’s going to take time for inventory to rise enough to curb runaway price growth,” Bachaud said. “Homeowners may be worried about rising interest rates, since they make a new mortgage considerably more expensive. But many of them are sitting on a large sum of equity that could sway them to get off the fence, bringing new inventory to the market this spring.”

Looking ahead, Zillow economists expect annual home-value growth to continue to accelerate through the spring, peaking at 22 percent in May before gradually slowing to 17.8 percent by February 2023. Sales in 2022 are forecast to rise 4.8 percent above those in 2021, which was the best year for sales since 2006.

Extremely strong demand finds that the houses that do get listed are scooped up in just 11 days, six days faster than in February 2021 and a full 25 days faster than in 2020.

Despite the challenging shopping environment, sales are still brisk for this time of year. More homes were transacted this February than in either February 2019 or February 2020, though sales were 11 percent lower than in 2021. Sales nationally generally slow through March before taking off in April, and the data show that now.

Rent prices reversed from a cooling trend in January, shooting up 1.1 percent in the February data and 17 percent from last year. Typical rent across the U.S. is now $1,883 per month, $283 per month higher than in February 2020. Rent growth was slow or in negative territory in 2020 after the outbreak of the pandemic, but it skyrocketed in 2021.

The largest monthly rent hikes among major metros were in Buffalo (2.3%), New Orleans (2.2%) and Miami (1.9%). Only Las Vegas and Birmingham saw monthly declines, at 0.3 percent and 0.2 percent, respectively.

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