Housing shortage intensifies, boosting rent prices and home values
With unemployment hovering close to all-time lows, the already limited housing supply is getting bought up and lifting rent and home prices around the country, according to Zillow.
Housing inventory decreased by 101,724 units — a 6.3% drop — year-over-year in October, the largest decline in 18 months. Meanwhile, Zillow's Home Value Index grew 4.7% to an average of $231,700 and Rent Index climbed 2.3% annually to $1,600.
"Despite some fearful headlines, the U.S. economy keeps on trucking, and that is reflected in the continued rent growth across the country," Skylar Olsen, Zillow's director of economic research, said in a press release. "The unemployment rate remains near record lows and wage growth keeps adding to renters' pocketbooks. The story of today's rent growth is far from just that of a few expensive superstar cities — rather, growing demand for rental housing is bumping up against limited housing supply and low vacancies all across the country."
By individual metro areas, Seattle experienced the largest annual inventory drop of 28.4%. Sacramento, Calif., was next with a 20.5% decline, followed by Cincinnati's 17.9% decrease. On the opposite end of the spectrum, Las Vegas's supply rose the most at 13.8%. San Antonio's 10.9% and Detroit's 10.1% increases trailed next in line.
Austin, Texas got the biggest boost in Home Value Index, up 7.8% year-over-year. Charlotte, N.C.'s 6.9% and Columbus, Ohio's 6.6% were next. The notoriously expensive San Jose, Calif., and San Francisco markets were the only ones where values declined. Their numbers were a negative-11.1% and a negative-3%, respectively.
Rising rents put more of a squeeze on residents in Phoenix than anywhere else in the country. The Rent Index there climbed 6.4%. Las Vegas followed with a 5.2% increase and Charlotte's 4% was next. Conversely, rent in Columbus and Houston fell 1.8% and 0.6%, respectively.