From March 2016 to March 2017, the number of homes on the market dropped 5 percent, according to Zillow’s recently released March Real Estate Market Report. The biggest inventory decreases took place in Minneapolis; Columbus, Ohio; and Seattle. Inventory fell 24 percent in Minneapolis, 19.5 percent in Columbus, and 17 percent in Seattle.
Zillow’s report also showed home values up 6.8 percent over the last year, hitting $196,500 for the month of March. The highest annual home value appreciation occurred in Seattle, where values rose 12 percent; Tampa, Florida (11 percent); and Dallas (11 percent).
Rents also rose over the year, jumping 0.7 percent up to $1,408 per month. Though there was an annual increase, it marks the slowest rent appreciation rate since November 2012, when rents rose just 0.6 percent.
The slowing rent growth is likely a result of increasing construction starts, which is helping “meet renter demand and soften the market,” according to Zillow’s report.
Rents slowed most in San Francisco. Down 0.1 percent for the year, last March saw the Bay Area with an appreciation rate of nearly 10 percent. Rent growth also slowed down in historically hot markets like Seattle and Sacramento, where appreciation rates were 6.7 percent and 4.7 percent, respectively.
Rent growth will need to slow even more if it’s going to help the housing market, according to Zillow Chief Economist Dr. Svenja Gudell.
“The slowdown in rental appreciating is mainly due to new construction finally meeting demand, and even outpacing demand in some areas," Gudell said. "But, rents are the highest they've ever been, weighing heavily on renters' budgets and making it extremely difficult for those renters hoping to become homeowners to save enough money for a down payment. In most markets, a monthly mortgage payment is more affordable than a monthly rent payment, but the most difficult aspect of homebuying for many aspiring homeowners is coming up with enough money for the down payment."
The one bright spot? That’d be declining mortgage rates.
“Mortgage rates are down from their December highs,” Zillow reported, “but still well above where they were before the election. In March, mortgage rates on Zillow ended at 3.94 percent, down from a high of 4.13 percent. The month low was 3.93 percent.”
See the full report at Zillow.com.