SAN FRANCISCO (CBS SF) — Home prices in the 50 largest markets in the U.S. have made the biggest monthly jump in seven years, with the biggest spike in the San Jose and San Francisco metro areas, according to the latest report from real estate database firm Zillow.
The Seattle-based company’s August Real Estate Market Report shows the typical home value at $256,663, up 0.7% from July and buoyed by lack of housing inventory and strong demand from buyers. Values were up in 48 of the 50 largest markets.
In the San Jose metro, however, the typical home value last month was $1,224,366, up 2.1% month over month and a whopping 10.3% year over year. In the San Francisco metro, the typical home value in August was $1,127,066, up 0.8% month over month and 2.7% year over year, the report said.
Meanwhile, rent prices in the Bay Area continued to tumble, with a typical one-bedroom rental in San Jose metro dropping 3.8% from last year to $3,219. In San Francisco metro, rental prices are down 4% from last year to $3,167, acccording to the report. Before the pandemic in February, rents were up in San Jose and San Francisco 3.5% and 2.4% year over year, respectively.
Nationwide, August median rents fell 0.3% from July to $1,771 – the largest monthly decrease since 2017, with rents falling most dramatically in San Jose, San Francisco, New York/Newark and Boston.
For homes on the market, Zillow reported they typically went under contract after 14 days, which is 14 days faster than at this time in 2019.
“American home shoppers faced an historic shortage of listings to choose from this summer, and that scarcity is now reflected in rapidly appreciating home values after a sluggish start to the home shopping season this spring,” said Zillow economist Jeff Tucker in a press release. “Builders are racing to catch up with demand, and rising prices should encourage more potential sellers to come off the sidelines and list. Still, the shortage of inventory should keep housing markets unusually tilted in sellers’ favor this autumn.”
The report stated that looking forward, upward price pressure would likely continue through the fall because of the inventory deficit while demand would hold steady, with buyers pulling the trigger after delaying purchases from earlier this spring and summer.
For renters, the outlook was for more price relief, especially in the Bay Area and New York metro area.
“Rental demand has been battered by still-elevated unemployment as well as some renters opting out of expensive markets with their ability to work remotely during the pandemic,” said Tucker. “The rental market may also be feeling an early gust of demographic headwinds, as the bumper crop of Millennials in their early 30s begin making the leap to homeownership.”