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California Market Values Flatline Against Backdrop of U.S. Rent Growth Acceleration
U.S. rent values continued their growth streak, accelerating for the ninth-straight month, according to the June Zillow Real Estate Market Report. The median U.S. rent rose 3% on an annual basis to $1,483, with Las Vegas (up 10%), Phoenix (up 8.4%) and Orlando (up 7.4%) seeing the largest year-over-year growth.
Rents are up YoY in 49 of the nation’s top 50 markets, with Milwaukee as the only exception. Nationally, rent growth has not been this strong since 2016 when pressure in the rental market spurred record numbers of multifamily permits.
The typical U.S. home is worth $227,700, up slightly from May after month-over-month values dropped for the first time in seven years this spring. That’s a stronger confirmation that housing markets are stabilizing as opposed to on the brink of an imminent downturn, points out Zillow. Annually, home values grew 5.2%, down from 7.6% a year earlier.
Salt Lake City (up 9.3% from June 2018), Indianapolis (up 8.8%) and Charlotte (up 7.7%) saw the strongest annual home value growth, as notable West Coast markets flatlined, with Los Angeles (up 0.9%), Seattle (up 0.4%) and San Francisco (0%) experiencing minimal to no home value growth compared to last year. San Jose, which last year saw a nation-leading annual growth rate of 23.4%, was the only market to see annual home values fall – by 8.2%.
Zillow Director of Economic Research Skylar Olsen says, “As much as record numbers of new apartments led many to believe that rental markets might have become over saturated with new supply, the reality is that demographics and general economic health continue to keep the pressure on. Yes, we saw rents fall in 2018, but that was driven by the concentration of supply in urban areas and large buildings at higher end price points competing against each other. What the rental market still craves are affordable units spread across the landscape. Show me a three-bedroom apartment in a small building located near good schools and I’ll show you an older millennial with kids ready to move in.”
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