Zillow says rents in San Francisco are escalating at the nation’s fastest pace, but growth in the region’s home values is expected to be cut in half over the next year.
Both trends are likely to come as a shock, both for those looking to rent and homeowners who have enjoyed the strong growth in home values.
A closer look at the numbers doesn’t make the picture any prettier.
Zillow (NASDAQ: Z) said San Francisco rents are up 15 percent from a year ago, pushing the median monthly rent to $3,198, according to the May Zillow Real Estate Market Reports. Last month Zillow said San Francisco is at the forefront of the nation’s “rental crisis.“
Zillow says the San Francisco metro housing market is the fourth fastest-growing large market in the country — after Denver, Dallas and San Jose — among the nation’s 35 largest markets.
(Denver, yes Denver, saw year-over-year home values jump 14.7 percent in May to just under $300,000 — a record.)
May’s Zillow Home Value Index for San Francisco rose at an annual rate of 10.7 percent to $746,600 — a record for the metro area.
In San Jose, metro home values hit $883,200, up 11.9 percent from a year ago. Both the San Jose and San Francisco areas’ double-digit growth in home values were driven by low interest rates, low inventory and high job growth, Zillow said.
But next year, growth in the home-value index is expected to slow to an annual rate of 5.3 percent in San Francisco and 4.7 percent in San Jose. That may come as a shock to Bay Area homeowners who have enjoyed a steady stream of Realtors’ postcards in recent years touting how much neighboring properties have fetched. (Let’s just say, the region’s home prices moved beyond absurdity some time ago.)
Receive San Francisco Business Times’s Morning Edition and Afternoon Edition newsletters and breaking news alerts.