People shopping for homes this summer are going to find fewer homes for sale and at higher prices. Real estate marketplace Zillow reports home values are rising faster than expected.
Its latest report shows prices are up 5% year-over-year while there are 3.4% fewer available homes than a year ago.
It’s no surprise, then, that metro areas that are experiencing the tightest inventory are seeing the fastest growth in prices. The fact that wages are finally growing a bit and unemployment has fallen means more people are in the market, increasing the demand for a limited supply.
Economics 101 tells you that when that happens, prices go up.
“The struggle will continue for home shoppers this summer,” said Zillow Chief Economist Dr. Svenja Gudell. “New construction has been sluggish over the past year; we’re building about half as many homes as we should be in a normal market. There still aren’t enough homes on the market to keep up with the high demand from every type of home buyer. In many markets, those looking to buy a home in the bottom or middle of the market will need to be prepared for bidding wars and homes selling for over the asking price. This summer’s selling season’s borders will most likely be blurred again as many buyers are left without homes and will need to keep searching.”
Denver has seen the fastest home price escalation, with the median home value rising 15.2% to $336,600 over the last 12 months. Portland, Ore., is close behind with a growth rate of 15.1%, to $325,400.
Other metros seeing double-digit median home value appreciation are Dallas, up 12.6%, to $183,700; San Jose, up 12.3% to $962,400; Seattle, up 11.6% at $386,300; Miami, up 10.5% to $232,000; and San Francisco, up 10% to $806,000.
The price increases are almost all for single-family homes. The Zillow report found nearly 12% of condos had a price cut over the past year, driven by more availability in the luxury condo market.