Breaking down the most recent Zillow data on home values and rents, BPC found:
- A 20.6% year-over-year increase in home values nationally and a 16.8% increase in rents in March 2022.
- Year-over-year home values increased in 871 of 873 metro areas (99.8%), while rents increased in all 107 metro areas (100%) for which information was available.
- 96% of metro areas had home values increase and 95% had rents increase faster than inflation, which rose 8.5% year-over-year as measured by the Consumer Price Index in March.
Our biggest takeaway: housing prices have increased almost universally across the country—with more metro areas experiencing rising prices than at any time over the last 20 years.
To better understand just how broadly housing costs are increasing across the country, we calculated a diffusion index of home values and rents. Diffusion indices are commonly used to identify and illustrate broad economic trends. A flat line at 50 would indicate that an equal number of metro areas have increasing prices as those that have decreasing prices. Above 50 shows an upward trend in prices among a majority of metros, while below 50 shows a decreasing trend in prices among a majority of metros.
As such, the chart below shows not how much prices are rising, but how broadly. It demonstrates that what many are seeing and feeling in their own communities—rising housing costs—is a concern shared widely across the United States.
A diffusion index shows how broadly a particular indicator is changing—i.e., an overall trend—as opposed to a specific level of change. For the diffusion indices above, BPC first calculated the year-over-year changes in all metro areas for which Zillow Home Value Index and Zillow Observed Rent Index was available. Metro areas with increasing prices were then assigned a value of 1, unchanged prices were given a value of 0.5, and decreasing prices were given a value of zero. The index shows the average of these assigned values across all metros. For example, an index at 95% means 95% of metros have increasing prices. Metro areas with missing data were excluded from our calculations.
For the past few years, the cost of housing, for both rent and sale, has been rising steadily and, as shown above, almost universally across the United States. While the onset of the pandemic in 2020 briefly disrupted this trend, prices have been rising strongly and broadly since then. As the country continues to struggle with housing affordability, BPC’s Terwilliger Center is working to identify and promote bipartisan policy options to expand the supply of homes and improve the affordability of housing, especially for low-income households and first-time homebuyers.
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