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Rising Demand Driving Home Prices Higher

The one-two punch of heavy demand and tamped down inventory are translating into a market where homes are moving off the market as if they were on a slippery slope: they’re not sticking around long, according to the June Zillow Real Estate Market Report.

The activity follows a period where prospective buyers were halted in early spring because of COVID-19.

Home values in June maintained their northern track, blossoming 4.3% annually to $252,178—quicker than the prior month and mirroring the rate as of June of last year in the course of what’s been, for home values, a period of stability.

The significantly hottest among the top-50 markets? Why Phoenix, naturally, where home values escalated 9.6% year-over-year. Values rose in Birmingham, Alabama (7.6%), and Memphis (7.5%). On the other side of the meteorological coin, the coolest large markets are Chicago, 0.8% annual growth, and San Francisco, just 1.1% growth.

San Jose and Seattle experienced turnarounds in home values. Home values in San Jose, which plummeted 9.9% annually as of June 2019—now are surging at a 5% pace. Values are at 7.4% in Seattle after dropping 0.7% year-over-year last June. Among large metro areas, that was the fourth most in the U.S.

"Buyers have come roaring back to the housing market after the initial shock of the pandemic and layoffs faded, and all signs indicate the hot spring selling season we anticipated has shifted to the summer," said Zillow Economist Jeff Tucker. However, those shoppers are going head to head over a “shockingly small” pool of homes, causing prices to resume their upward climb after a little softness this spring, he continued.

Last month, MReport reported that summer home sales were rising—coasting off the market faster than at any time since spring 2018, a sign that potential buyers should act quickly, according to a Zillow analysis.

Fresh listings bounced 14% month over month, a strong sign that sellers are noticing that buyers are ready to talk turkey.

"Buyers shopping today might expect to be welcomed by desperate sellers, but they'll instead discover houses selling like hotcakes in the speediest market in recent memory," said Tucker.

About Author: Chuck Green

Chuck Green has contributed to the Wall Street Journal, Washington Post, Los Angeles Times, San Francisco Chronicle, Chicago Tribune and others covering various industries, including real estate, business and banking, technology, and sports
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