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Two years in: Housing market transformed by prices, lack of inventory

Two years in: Housing market transformed by prices, lack of inventory


A sea change in housing has occurred over the course of the pandemic, but demand remains strong 

  • Inventory fell in February, breaking with past yearly trends, and now stands at 48% below 2020.
  • Home value appreciation is quickly increasing, making the typical home worth 32% more than in 2020.
  • Rent prices have reversed from a cooling trend; a one-year lease now would cost nearly $3,400 more than one signed two years ago.
  • Zillow expects appreciation to peak at 22% in May before returning to 17% by February 2023.

SEATTLE, March 17, 2022 /PRNewswire/ — Two years into the pandemic, the U.S. housing market is virtually unrecognizable from its previous state, with nearly half the number of homes for sale, prices higher by one-third and rising, and rents hundreds of dollars more a month, Zillow®‘s latest monthly market report1 shows.

None of that has curtailed demand, with listed properties flying off the market and sales stronger than before the pandemic.

“We’ve seen strong demand for homes and prices rising at previously unfathomable rates. A wave of millennial and baby boomer buyers have depleted housing inventory that was never really replenished following the Great Recession,” said Zillow economist Nicole Bachaud

Lack of inventory is driving these historic price hikes. There are roughly 730,000 houses currently for sale in the U.S., compared to 1.4 million in February 2020. 

Historically, inventory has generally bottomed out in December and then rebounded as sellers listed their houses in preparation for prime spring shopping season. This year, supply continues to dwindle into the new year. Total inventory in February is 11.9% lower than in January. 

Of the 50 largest U.S. metros, those with the largest inventory deficit since 2020 are Raleigh (-69.7%), Hartford (-63%), Providence (-61.8%) and Miami (-61%). Those seeing the smallest decrease are San Francisco (-7.8%), San Jose (-17.9%) and Austin (-26.9%). 

The typical U.S. home value is now $331,533, up 32.4%, or $81,000, compared to February 2020, and is 20.3% higher than last year — another in a long line of new records for annual appreciation. February 2020 presented a much more standard 3.7% annual growth. 

The rate at which prices are rising is accelerating as well, with month over month appreciation up to 1.6%, up from a low of 1.2% in November. 

“Builders are working feverishly to get new construction and move-in ready homes on the market, but it’s going to take time for inventory to rise enough to curb runaway price growth,” Bachaud said. “Homeowners may be worried about rising interest rates, since they make a new mortgage considerably more expensive. But many of them are sitting on a large sum of equity that could sway them to get off the fence, bringing new inventory to the market this spring.” 

Looking ahead, Zillow economists expect annual home value growth to continue to accelerate through the spring, peaking at 22% in May before gradually slowing to 17.8% by February 2023. Sales in 2022 are forecast to rise 4.8% above those in 2021, which was the best year for sales since 2006.

Extremely strong demand finds that the houses that do get listed are scooped up in just 11 days, six days faster than in February 2021 and a full 25 days faster than in 2020. 

Despite the challenging shopping environment, sales are still brisk for this time of year. More homes transacted last month than in either February 2019 or February 2020, though sales are 11% lower than in 2021. Sales generally slow through March before taking off in April, and the data shows that now. 

Rent prices reversed from a cooling trend in January, shooting up 1.1% from last month and 17% from last year. Typical rent across the U.S. is now $1,883 per month, $283 per month higher than in February 2020. Rent growth was slow in 2020 after the outbreak of the pandemic, but it skyrocketed in 2021.

The largest monthly rent hikes among major metros were in Buffalo (2.3%), New Orleans (2.2%) and Miami (1.9%). Only Las Vegas and Birmingham saw monthly declines, at 0.3% and 0.2%, respectively. 

Metropolitan
Area*

Zillow
Home
Value Index
(ZHVI)

ZHVI –
Change
Since
Feb.
2020

ZHVI –
Month-
over-
Month
Change

Median
Days to
Pending

Inventory–
Change
since Feb.
2020

Zillow
Observed
Rent Index
(ZORI)

ZORI –
Change
Since
Feb.
2020

United States

$331,533

32.4%

1.6%

11

-47.7%

$1,883

17.6%

New York, NY

$582,684

21.3%

0.8%

37

-45.0%

$2,860

8.3%

Los Angeles
Long Beach–
Anaheim, CA

$892,558

30.4%

1.4%

12

-40.1%

$2,816

13.6%

Chicago, IL

$296,053

22.3%

0.9%

19

-49.3%

$1,797

8.1%

DallasFort
Worth, TX

$361,270

39.6%

2.4%

16

-47.3%

$1,699

21.4%

Philadelphia,
PA

$318,035

26.6%

0.8%

13

-40.7%

$1,742

12.8%

Houston, TX

$287,957

29.6%

1.5%

13

-43.0%

$1,518

12.6%

Washington,
D.C.

$536,402

21.9%

0.9%

8

-34.8%

$2,120

7.6%

MiamiFort
Lauderdale, FL

$410,781

34.7%

1.9%

17

-61.0%

$2,871

36.9%

Atlanta, GA

$353,691

43.1%

2.0%

9

-52.1%

$1,867

28.4%

Boston, MA

$624,600

25.8%

1.2%

9

-50.6%

$2,702

5.5%

San Francisco,
CA

$1,426,520

25.8%

1.6%

11

-7.8%

$3,084

0.7%

Detroit, MI

$232,216

27.8%

1.2%

11

-43.1%

$1,371

19.0%

Riverside, CA

$555,853

43.6%

2.1%

12

-45.9%

$2,537

31.0%

Phoenix, AZ

$442,976

55.3%

2.0%

12

-28.3%

$1,884

35.4%

Seattle, WA

$747,353

39.9%

1.8%

5

-33.7%

$2,160

11.4%

Minneapolis
St. Paul, MN

$363,306

22.7%

1.0%

18

-32.2%

$1,596

7.3%

San Diego, CA

$880,414

44.0%

2.4%

7

-47.2%

$2,778

22.4%

St. Louis, MO

$230,414

25.7%

1.4%

7

-50.7%

$1,214

15.2%

Tampa, FL

$341,997

49.7%

2.3%

6

-54.5%

$1,999

37.1%

Baltimore, MD

$360,956

21.6%

0.9%

10

-46.7%

$1,769

14.1%

Denver, CO

$614,138

35.9%

1.9%

5

-58.4%

$1,885

15.1%

Pittsburgh, PA

$206,604

26.8%

1.4%

25

-40.9%

$1,310

10.1%

Portland, OR

$558,513

31.4%

1.5%

7

-43.2%

$1,796

14.2%

Charlotte, NC

$353,106

43.7%

2.2%

5

-47.9%

$1,719

23.1%

Sacramento, CA

$595,005

36.7%

1.6%

8

-35.4%

$2,212

20.5%

San Antonio, TX

$315,208

33.5%

1.7%

13

-49.1%

$1,396

18.8%

Orlando, FL

$354,569

37.0%

2.2%

7

-44.1%

$1,905

26.8%

Cincinnati, OH

$246,825

30.6%

1.2%

5

-40.7%

$1,419

15.5%

Cleveland, OH

$204,808

29.2%

1.2%

11

-59.6%

$1,257

15.2%

Kansas City, MO

$273,455

30.8%

1.8%

5

-39.1%

$1,256

16.0%

Las Vegas, NV

$416,647

41.9%

2.5%

8

-42.1%

$1,805

32.9%

Columbus, OH

$279,883

29.5%

1.4%

4

-35.3%

$1,377

16.4%

Indianapolis, IN

$254,810

35.2%

1.8%

5

-33.2%

$1,396

20.8%

San Jose, CA

$1,629,819

29.7%

2.5%

12

-17.9%

$3,059

1.7%

Austin, TX

$573,123

68.6%

2.5%

22

-26.9%

$1,798

22.1%

Virginia Beach, VA

$308,186

25.3%

1.0%

19

-48.0%

$1,538

19.9%

Nashville, TN

$416,472

43.1%

2.6%

5

$1,774

22.6%

Providence, RI

$426,226

32.9%

1.0%

12

-61.8%

$1,809

23.2%

Milwaukee, WI

$257,144

25.8%

1.0%

34

-48.6%

$1,179

10.5%

Jacksonville, FL

$334,960

43.1%

2.3%

8

-53.2%

$1,719

30.6%

Memphis, TN

$216,710

34.9%

1.8%

16

-39.0%

$1,478

26.8%

Oklahoma City, OK

$204,073

26.6%

1.4%

6

-41.3%

$1,271

16.5%

LouisvilleJefferson
County, KY

$230,178

25.1%

1.1%

8

-35.7%

$1,196

14.9%

Hartford, CT

$302,469

27.1%

0.9%

15

-63.0%

$1,546

14.7%

Richmond, VA

$313,876

24.7%

1.1%

6

-46.3%

$1,487

17.8%

New Orleans, LA

$258,775

23.6%

1.1%

8

-49.8%

$1,492

22.2%

Buffalo, NY

$230,368

31.0%

1.0%

12

-47.6%

$1,132

15.7%

Raleigh, NC

$420,228

46.3%

2.6%

5

-69.7%

$1,672

22.4%

Birmingham, AL

$227,149

29.4%

1.4%

8

-44.4%

$1,279

16.7%

Salt Lake City, UT

$575,579

47.9%

2.6%

7

-57.7%

$1,629

24.0%

*Table ordered by market size 

1 The Zillow Real Estate Market Report is a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Research. For more information, visit www.zillow.com/research. The data in the Zillow Real Estate Market Report are aggregated from public sources by a number of data providers for 931 metropolitan and micropolitan areas, dating back to 2000. All current monthly data at the national, state, metro, city, ZIP code and neighborhood levels can be accessed at www.zillow.com/research/data.

About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life’s next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and ease. 

Zillow Group’s affiliates and subsidiaries include Zillow®, Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Zillow Homes, Inc., Trulia®, Out East®, ShowingTime®, Bridge Interactive®, dotloop®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).  

SOURCE Zillow





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