Home Values Continue Climb, Spark Bidding War
Zillow’s Real Estate Market Reports saw home values climb to $158,300 average for April, which is a 0.5% month-over-month increase. April marked the sixth consecutive month in which home values appreciated more than 5% on a yearly basis.
Dr. Stan Humphries, chief economist at Zillow, says that this kind of growth will likely be short-lived. “April marks the sixth straight month of annual home value appreciation of 5% or above, the longest such streak since the height of the bubble in 2006. In the short-term, this has been welcome news for homeowners. But in the long-term, this cannot be sustained and consumers entering the market today should not expect this kind of appreciation to last.”
The reality is that the lack of inventory has led buyers to bid more competitively against each other, which has led to a significant increase in home prices and tighter housing conditions.
The May Home Value Forecast (HVF) report shows the sold-to-list price ration lands somewhere in the range of 92 and 98 percent. However, in high demand markets, the ratio can exceed 100 percent. On a local level, the San Francisco Bay area showed nearly all ZIP codes sold-to-list-price-rations close to or above 100%, leading to increased levels of bidding wars.
That said, several top markets have fallen off the list since their year-over-year sales counts are down due to lack of inventory. If the increase in home prices will likely be short-lived, does this mean this type of competition will persist?