Zillow Group IR Blog

June 2018 Real Estate Market Report

Half of Homes Have Regained Peak Values, But the Recovery Is Uneven 

  • Half of all U.S. homes (50.4 percent) are currently worth as much or more than they were at the peak of the housing bubble, but the recovery has been uneven.
  • 57.1 percent of homes in the top value tier have met or exceeded their pre-recession values, compared to just 39.7 percent in the bottom tier.
  • In six major metros, less than 10 percent of homes have recovered all the value lost during the recession: Las Vegas (0.8 percent), Hartford, Conn. (3.7 percent), Orlando, Fla. (5.4 percent), Riverside, Calif. (6.5 percent) and Baltimore (8.7 percent) and Miami (9.6 percent).
  • The median home value in June 2018 was $217,300, up 8.3 percent from a year earlier. The median rent was $1,440, up 1.3 percent from a year ago.

The tremendous rebound in home values from the Great Recession has relieved pocketbooks and created wealth nationwide – but the recovery has been uneven.

While 50.4 percent of U.S. homes are currently worth as much or more than they were prior to the housing bust, a much greater share (57.1 percent) of homes valued in the top third nationally have rebounded than homes valued in the bottom third (39.7 percent). Condos and co-ops also are struggling to make their way back to prior peaks, with just 38 percent having fully rebounded, compared with 52 percent of single-family homes.

The recovery is geographically uneven as well.

Some markets have recovered completely or almost completely. Among the largest 50 metros, these nine experienced more than 95 percent of homes returning to or exceeding their pre-recession peak values:

  • Denver, Colo. (99.6 percent)
  • San Antonio, Texas (98.8 percent)
  • Austin, Texas (98.7 percent)
  • San Jose, Calif. (98.7 percent)
  • Nashville, Tenn. (97.9 percent)
  • Dallas (97.7 percent)
  • Seattle (97.3 percent)
  • Houston (97 percent)
  • Salt Lake City (97 percent)

However, in six major metros, less than 10 percent of homes have recovered to their pre-recession peaks:

  • Las Vegas (0.8 percent)
  • Hartford, Conn. (3.7 percent)
  • Orlando, Fla. (5.4 percent)
  • Riverside, Calif. (6.5 percent)
  • Baltimore (8.7 percent)
  • Miami (9.6 percent)

Depressed home values have an impact on underwater mortgages in some areas. Borrowers who got a mortgage around the peak of the housing bubble, when home values were at their height, need their homes to maintain or exceed those high levels to avoid falling into negative equity. In some markets, that’s gone beautifully: Rising home values in San Jose, Calif., for example, contribute to its low rate of negative equity. Just 1.9 percent of mortgages there are underwater.

The opposite holds true in certain markets: In Las Vegas, where less than 1 percent of homes have bounced back to their peak values, 9.9 percent of mortgages remain underwater. In Baltimore, 14.2 percent of mortgages remain in negative equity.

Where homes fall in the broader spectrum of home values for their area also makes a difference. In many of the country’s top 50 markets – Atlanta; Boston; Columbus, Ohio; Indianapolis; Kansas City, Mo.; Los Angeles; and San Francisco – homes valued in the bottom third for their area only recently began making a substantial comeback to pre-recession values.  Top-tier homes have been consistently regaining their pre-recession values since at least 2013.

In other places, the value tier disparity is even starker: While top-valued homes in Birmingham, Ala., Cleveland, Detroit, Milwaukee, New York and St. Louis have consistently regained value since the recession, there has been almost no traction in the share of lower-valued homes regaining their earlier peaks.

Among the largest 50 metros, these markets saw the smallest share of lower-valued homes has recovered:

  • Las Vegas (0.4 percent)
  • Riverside, Calif. (2.4 percent)
  • Detroit (3 percent)
  • Orlando, Fla. (3.6 percent)
  • Providence, R.I. (3.8 percent)

Lower-Valued Homes Continue to Surge

The median U.S. home was worth $217,300 in June, according to the Zillow Home Value Index, up 8.3 percent from a year earlier. Homes valued in the top-third nationally climbed 5.1 percent to $380,100; they have been bumping along between 4 percent and 5.5 percent annual growth since August 2014.

Lower-valued homes are climbing much faster, gaining 11.7 percent year-over-year in June to a median of $123,200. Among the largest 35 metros, those with the fastest-growing lower-tier home values in June were Tampa, Fla. (22.6 percent), Las Vegas (22 percent), San Jose, Calif. (20.3 percent), Baltimore (19.6 percent), Atlanta and Pittsburgh (both 19.3 percent).

Rent Growth Slows

The U.S. Zillow Rent Index in June rose 1.3 percent year-over-year to $1,440 a month, but was unchanged from May. Annual rent growth slowed somewhat from 2.1 percent in May, continuing a months-long trend of stabilization in the national rental market.

Among the largest 35 metros, those with the fastest rent growth in June were Riverside, Calif. (5.6 percent), Sacramento, Calif. (5.4 percent), Las Vegas (4.1 percent), Atlanta (3.6 percent) and Orlando, Fla. (3.3 percent).

Inventory Crunch Continues

Continuing a years-long trend, the number of U.S. homes for sale in June fell 4.8 percent to 1.2 million, the 41st month in a row of annual inventory declines. Inventory of homes in the top value tier dropped 5.4 percent, while the number of homes for sale in the bottom value tier fell 3.6 percent.

Recession Bounceback Methodology

  1. For single-family homes and condos built before 2005, we identified the peak Zestimate between 2005 and 2009 (the bubble era) with a three-month rolling median.
  2. We removed properties without a Zestimate peak in the bubble era and removed properties in metros that did not experience a bubble (i.e., the metro ZHVI peaked in the last three months of 2009, implying it continued to rise despite the recession).
  3. For every month between January 2010 and present, we compared each property’s Zestimate peak with its current Zestimate. If the current Zestimate is at least as high as the peak value, we marked that property as “bounced back.”
  4. For each region, home type and month, we calculated the percentage of homes that bounced back, then calculated the cumulative bounceback percentage.
  5. We removed data series with sample sizes of fewer than 1,000 properties and series with more than 15 months where no properties bounced back.

Check out Zillow Research for a closer look at the economy through the lens of the housing market.

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