Rent growth has also started to recover
The typical US home value posted 1.1% month-over-month and 3% quarterly growth in November – the largest gains on Zillow’s record since 1996.
Zillow’s Real Estate Market Report shows that the residential rental market’s steady recovery in November boosted the rapid acceleration in home values across the US, which have jumped 7.5% since last year to $263,351. The metros with the largest annual increases were San Jose (+14.2%), Phoenix (+14.1%), and Seattle (+13.2%).
Meanwhile, the typical US rent was up 1.1% year over year to $1,734, after falling from its 3.9% growth level in February to just 0.7% in October as a result of the coronavirus crisis. Among the 100 largest markets, monthly rent growth was highest in Stamford, Conn. (3.1%); Providence, RI (2.3%); and Ogden, Utah (2.1%).
“With a vaccine on the horizon and Gen Z continuing to graduate from college, we expect the cloud of uncertainty surrounding the pandemic to lift and demand for rental units to surge in 2021,” said Zillow Senior Economist Chris Glynn. “Though the coming rebound in the rental market is good news for some, it will certainly put millions of renters who were hit hard by pandemic-related income loss in an even more tenuous position, and further government intervention will likely be needed to avoid a painful wave of evictions.”
Looking forward to 2021, Zillow economists expect rent growth to make up for what it lost this year. Zillow also forecasted home values to rise by 3.6% in the three months ending February and reach 10.3% annual growth by November.
“We expect the housing market to continue its bull run from this summer and fall well into 2021,” said Zillow senior economist Jeff Tucker. “This rapid price growth will be driven by the same factors that took the steering wheel in 2020: strong demographic trends, shifts in buyer preferences sparked by the pandemic, low mortgage rates, and short supply. The millennial generation is moving into their mid-30s and bringing a wave of demand from renters looking to buy their first homes.”