Home price appreciation gained $1.9 trillion in 2018, as the national housing market continued recovering from the Great Recession, according to Zillow.
The strong year brought the market’s overall worth to an all-time high of $33.3 trillion — $4 trillion more than the height of the housing bubble. The market gained $10.9 trillion in value after reaching its nadir in 2012.
“Seen from the rearview mirror, 2018 was a year of unusually strong, stable home value growth across the country,” Aaron Terrazas, Zillow senior economist, said in a press release. “But cracks in the foundation are clearly starting to emerge. During the second half of the year, appreciation slowed sharply in the priciest corners of the country while it picked up in affordable hotspots.”
The rise in home prices was mostly due to the inventory deficit. As strides are made in the housing supply, appreciation is grinding down to a lower pace. The cyclical nature of the market looks to be changing in the coming year.
“Periods of stability often precede periods of instability, and the outlook for 2019 is certainly both cloudier and blurrier than the outlook a year ago.” Terrazas continued. “Housing wealth may have touched new highs this year, but home value gains don’t translate into dollars in the bank account unless homeowners opt to sell or borrow against their home and, in contrast to previous housing booms, many Americans have been more reluctant in recent years to spend against their home’s worth. Moving toward an uncertain future, that may prove to be a prescient choice.”
Seven states ended 2018 with cumulative individual values of $1 trillion or above. The California housing market led in value with $7.9 trillion. New York’s $2.5 trillion followed with Florida’s $2.4 trillion close behind. The lowest states were Wyoming at $52 billion, North Dakota at $54.4 billion and South Dakota with $56.3 billion.