In November, national home values rose at their fastest annual pace since 2006, near the peak of the housing bubble. The Zillow Home Value Index (ZHVI) is $192,500, just two percent shy of the records set in 2007, according to the November Zillow Real Estate Market Reports.
Rents, which were the big story of 2016 as they rose at a record pace, have slowed considerably to a 1.5 percent annual appreciation rate; this rate is expected to continue into 2017. The median monthly rent payment in the U.S. is now $1,403.
Home values were 6.5 percent higher this November than last. Strong growth is especially evident in a handful of new powerhouse markets, including Seattle, Denver, Portland and Dallas, whose strong job markets attracted new home buyers over the last year.
At their fastest pace, home values across the country were appreciating about 11 percent year-over-year. When the bubble burst, home values plummeted, falling 7.4 percent year-over-year during the depths of the crisis, and then began a steady recovery in 2012.
"Home value growth continues to be strong, supported by solid buyer demand and still limited for-sale inventory in many markets across the country," said Zillow Chief Economist Dr. Svenja Gudell. "Conditions today are very different than the ones we saw back in 2006, which was the last time we saw home values rising this fast. Rampant real estate speculation and loose mortgage credit have been replaced by the sound economic fundamentals we are seeing now."
Portland, Seattle and Dallas reported the highest year-over-year home value appreciation among the 35 largest U.S. metros. Portland home values rose 14 percent to a median value of $351,800. Both Seattle and Dallas home values rose 12 percent since last November.
Seattle reported the fastest rent appreciation of the 35 largest U.S. metros for the sixth month in a row, up almost 9 percent annually. Portland and Sacramento follow Seattle, with rents up about 7 percent.
Inventory still remains an issue for home buyers across the country. There are 6 percent fewer homes to choose from than a year ago, with Boston, Indianapolis and Kansas City reporting the greatest drop. In Boston, there are 26 percent fewer homes to choose from than a year ago, and 21 percent fewer in Indianapolis and Kansas City.