Zillow expects home values to grow 11.7% between August 2021 and August 2022, and to end 2021 up 19.9% from December 2020.
Zillow expects home values to grow 13.6% between September 2021 and September 2022, and to end 2021 up 19.5% from December 2020.
The 10-year mortgage rate is about 2 percent. If Zillow is right, even for someone who wanted to live in a place for only one year, it would be cheaper to buy a house, pay the cost of capital, pay property tax and insurance, and pay a realtor 5 percent at the end of the year to sell the house than to pay rent (since the preceding scenario will yield at least a small cash profit).
So…. either (1) everyone who rents is stupid, (2) nobody who rents can qualify for a mortgage, or (3) Zillow is wrong about where the price of a house to purchase is going.
(Since we are renters and I am stupid, I am going to bet on Explanation 1!)
Note the pasted-on price adjustment in the chocolate alligator for sale below (PBI):
- “Accelerating Inflation Spreads Through the Economy” (WSJ, 10/13)