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Home values rising at rapid rates

April 12, 2018

It should come as no surprise to observers of the real estate industry that home prices are still rising rapidly, thanks to high demand and limited supply of properties being put up for sale. However, the fevered pitch of demand has gotten to the point that, in many parts of the country, the rate at which home values have risen over the past year is outpacing many working people's incomes.

"Home values increased by an average of 7.6%."

Indeed, the typical homeowner in the entire U.S. saw their homes' values increase by an average of 7.6 percent from February 2017 to the same month this year, according to new data from Zillow. To break that number down into "working hours" - that is, if the home "worked" a standard, 40-hours-per-week full-time job - the average home earned $7.09 in equity per hour, just 16 cents below the federal minimum wage.

A closer look
Of course, in busier markets with high extant property values, those hourly "wages" are significantly above most people's earnings, the data showed. For instance, in San Jose, California, homes garnered "wages" averaging nearly $100 per hour, versus the city's minimum wage of $13.50. The median U.S. household income is about $59,000, translating to about $28 per hour.

Altogether, homeowners with median-priced properties in nearly half of the nation's 50 largest cities saw their homes earn more in equity than their various minimum wages, the report said. This, of course, is somewhat captive value, meaning that homeowners can't access it directly and turn it into dollars and cents, but these market conditions nonetheless highlight just how much home values are rising relative to other types of consumer wealth nationwide.

Other issues
Meanwhile, prices are rising so fast in many major cities that homeowners might be shocked to see just how much more value their properties have gained, and what that might mean for their other expenses, according to the Philadelphia Inquirer. In Philadelphia, the city recently completed some new property assessments to properly value many of the city's neighborhoods, to coincide with a planned increase in the property tax.

"Property tax bills are up an average of $165 in Philadelphia."

As a result of these two factors, some homeowners could see their annual property tax bills nearly double next year, the report said. In the city's data, the average home was shown to have increased in value by some 10.5 percent, pushing the median property tax bill up $165 annually. But that number could be significantly higher for many residents, and for some, it could increase tenfold.

For their part, a number of city officials say these changes were implemented all at once - resulting in a 4.1 percent - instead of more gradually over a number of years, the report said.

"I'm not saying it's not warranted," Councilman Allan Domb, a real estate broker, told the newspaper. "But instead, we're playing catch-up from previous years."

Even vacant lots improving
Meanwhile, in relatively quiet markets like North Dakota, property values are spiking as well, according to the Jamestown Sun. In fact, owners of even vacant lots in Jamestown, North Dakota, saw those property values increase 5 percent over the last year. This is a relatively small city in one of the least-populated states in the country, and overall property values there increased just under 1.7 percent in the past year.

These are certainly issues for homeowners to consider as they weigh certain decisions, such as whether it would be prudent to sell these days. As property values rise and relatively few homeowners enter the market, there may be a unique opportunity for owners to capitalize on current market conditions.

 

 

 

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