The U.S. housing-market recovery continues apace — nowhere more so than in the Pacific Northwest.
The total value of the U.S. housing stock grew to a record $29.6 trillion in 2016, an increase of nearly 6% and $1.6 trillion over the previous year, according to an analysis of the 35 largest metro areas by real-estate website Zillow. Portland, Ore., had the biggest increase in value among the largest housing markets, growing more than 13% in 2016, followed by Seattle (up 12.7%) and Dallas (up 11%). Los Angeles is the most valuable metro area, worth a cumulative $2.5 trillion. “The U.S. housing market has regained all the value lost during the housing crisis,” Zillow found. “The cumulative value of all homes in the U.S. declined by $6.4 trillion between 2006 and 2012.”
However, there may be speed bumps to the housing-market recovery in 2017 as the U.S. Federal Reserve has already raised interest rates twice. The monetary-policy-making Federal Open Market Committee’s median forecast translates to two quarter-point increases in 2017, followed by three in 2018 and three in 2019. “As buying a home gets more expensive, affordability remains a concern for many,” says Zillow chief economist Svenja Gudell. Even the single-digit increase in house prices during 2016 will likely mean some American families are priced out of homeownership, she said.
As investors return to the housing market and flipping increases, many buyers across the country are feeling an ill wind of rising house prices. And that may continue into 2017. In the fourth quarter of 2016, some 29% of U.S. county housing markets were less affordable than their historic affordability averages, up from 24% of markets in the third quarter and 13% of markets a year ago, according to recent data published by the housing-research firm ATTOM Data Solutions, the parent company of real-estate website RealtyTrac. The most recent affordability percentage was the highest since the third quarter of 2009 (47% of markets).
The report, which analyzed median home prices from publicly recorded sales deed data collected by ATTOM Data Solutions and average wage data from the U.S. Bureau of Labor Statistics, covered 447 U.S. counties with a combined population of more than 184 million. “Rapid home-price appreciation and tepid wage growth have combined to erode home affordability during this housing recovery, and the recent uptick in mortgage rates only accelerated that trend in the fourth quarter,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. Without wages catching up and/or would-be homeowners taking on a second job, he expects a further rise.