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Zillow's latest Real Estate Market Report revealed that home values are rising at a pace that hasn't been seen since the Great Recession. The typical home value reached $259,906 in September 2020 and includes a month-over-month rate of 0.8%, the largest jump since November 2005, according to the report.
Additionally, Zillow reported quarterly growth of 2.2%, the largest since 2013 and annual growth of 5.8%, the largest in close to two years. So, why are we seeing such an aggressive increase in home values? Well, the story has been the same for years now, there simply is not enough inventory to meet the heightened demand of the housing market. Now, with rates reaching historic-lows yet again, demand is continuing to remain high. Sellers are able to leverage this demand when it comes to the asking price of their homes.
The latest report on home value growth has pushed Zillow to update its forecast as it now expects a 7% growth in the coming year.
"Home values are accelerating more quickly than any time since 2014, marking a sharp turnaround from a market briefly put on hold during the outbreak of the pandemic this spring," said Zillow senior economist Jeff Tucker. "The historic shortage of homes available for sale has boosted home price appreciation, now that buyers are waging bidding wars for the few options left. Builders are racing to fill the gap, and we may see more listings next year if nervous sellers become reassured, but this shortage of homes is so deep that any reversal would take at least several months."
Read more from the Zillow Real Estate Market Report.