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Zillow's market report found that the extreme demand that has been driven by the sub-3% mortgage rates pushed home values to record highs. The report revealed that monthly appreciation of home values in January matched record highs, as annual growth is higher than any time since 2006.
The Zillow Home Value Index increased to $269,039 in January, 1.1% month-over-month. This matched December's all-time record high. Additionally, annual home value appreciation was 9.1%, which is reportedly the largest annual growth recorded since June 2006, according to Zillow.
"Homebuying demand has pushed the pedal to the metal for price appreciation this winter," said Jeff Tucker, senior economist at Zillow. "Normally we'd be talking about the spring selling season ramping up, but it looks more like last summer's selling season simply never ended. Buyers eager to secure more space and lock in today's rock-bottom interest rates are having to move quickly and aggressively to win out in this competitive market."
According to the report, home values increased in all 50 of the largest U.S. metros. The metros that saw the most drastic increases include Phoenix at 17.1%, San Jose at 14.2% and Austin at 13.7%. The slowest growth took place in San Francisco, Chicago and San Antonio.
"A few major demand drivers are keeping competition high and the market hot through the customarily cool winter," according to Zillow. "For one, a wave of millennials are now entering their peak home-buying years. The number of Americans aged 25-34 was 12% higher in July 2020 than July 2010, according to Census estimates -- an increase of approximately 4.9 million people."
Click here to learn more from the report.