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31 » VISIT US ONLINE @ DSNEWS.COM U.S. HOUSING MARKET WORTH MORE THAN COMBINED GDP OF U.S. AND CHINA If you've ever wondered how much every home in America is worth combined, the latest Real Estate Analytics report by Zillow will do the math for you. According to the report, the total value of all homes in the United States was expected to reach more than $29.6 trillion in 2016, which is a record high and a 5.7 percent increase from 2015. If that isn't enough to boggle your mind, the combined value of all homes in the nation is more than the GDP of the United States and China put together. "So it's safe to say the United States housing market is pretty darn valuable—worth more than the entire 2015 market capitalization of every U.S. public company combined (roughly $25 trillion)," Zillow Chief Economist Svenja Gudell said, noting that "the national housing market is really just a collection of smaller, local markets. And on their own, the total value of housing in some of America's priciest places is eye-popping." One West Coast city topped the list for its lavish homes. Los Angeles homes, which include celebrity-populated suburbs like Beverly Hills and Malibu, hold the title of America's most valuable housing market and have a combined total value of more than $2.5 trillion, which is more than double the combined wealth of America's 50 richest citizens. e Big Apple came in at a close second at a little less than $2.4 trillion, and is arguably more or less the GDP of France. e San Francisco Bay area rounds out the top three spots, with a combined housing value of almost $1.3 trillion. e rest of the top ten most valuable metro markets in the U.S. are Washington, D.C., Miami, Chicago, Boston, San Jose, San Diego, and Philadelphia, according to Zillow. On the renters' side of the market, Americans spent $479 billion on rental properties, which was $18 billion more than they spent in 2015 and $97 billion more than in 2011 during the recession, Zillow reported. Not surprisingly, New Yorkers paid the biggest chunk of change by spending $54.6 billion in rent last year, which was $2.4 billion more than they paid in 2015, according to Zillow. Following New York City were residents of Los Angeles and San Francisco, who spent $38.6 billion and $15.8 billion respectively on rent in 2016. Markets that accumulated more than $10 billion in rent were Chicago ($14.9 billion); Washington, D.C. ($14.4 billion); Miami ($12.3 billion); Dallas ($11.1 billion); Houston ($10.5 billion); and Boston ($10.3 billion). ACCELERATING WAGE GROWTH WILL COMBAT RISING INTEREST RATES Affordability has strengthened on a national level, according to First American in its Real House Price Index. Real house prices increased 0.7 percent between September 2016 and October 2016, which is a 0.4 percent decrease from September 2015. Real house prices are 39.9 percent below their housing boost peak in July 2006 and 19.2 percent below the level of prices in January 2000. e unadjusted national price level is 0.01 percent below the housing-boom peak in 2007, according to the report. First American reported that real house prices decreased on a year-over-year basis in the month of October as mortgage rates were still significantly lower than the previous year, falling from 3.80 percent to 3.47 over the 12-month period. Wages grew 2.8 percent year-over-year in October, which was the fastest pace since the beginning of the financial crisis. However, increasing mortgage rates and rising house prices put pressure on real prices in various local housing markets. Mark Fleming, Chief Economist for First American, discussed the components that will contribute to affordability in 2017. "In 2013, we saw the significant slowing effect the 'taper- tantrum' had on unadjusted house prices. We expect unadjusted prices to respond similarly to the recent increases in mortgage rates, though to a lesser degree this time," he said. "While mortgage rates above 4 percent reduce affordability, accelerating wage growth and the expected slowdown in unadjusted price appreciation are both beneficial for affordability. I expect the net effect on consumer house-buying power to remain modest." Home prices have decreased on a year-over- year basis in only 8 of the 43 metropolitan areas tracked in the report, as tight supply continues to drive up unadjusted prices, which have yet to slow in response to the recent increases in mortgage rates. Among the largest 50 Core Based Statistical Areas (CBSAs), the five markets with the highest year-over-year increase in the RHPI are: Charlotte (9.8 percent); Jacksonville, Florida (9.8 percent); Tampa (7.5 percent); Columbus (6.6 percent); and Detroit (5.8 percent). Markets with the greatest year-over-year decrease in RHPI were San Francisco (5.3 percent); Virginia Beach, VA (4.0 percent); San Jose (2.4 percent); Milwaukee (0.9 percent); and Baltimore (0.5 percent). "Preceding the FOMC meeting earlier this month, we assessed the impact of rate changes on real house prices and affordability looking ahead to the end of 2017. While existing homeowners with fixed-rate mortgages will feel no affordability impact, potential first-time homebuyers will have to adjust their expectation for what they can afford. e post-election rate increase, as well as the expected path of FOMC Federal Funds rate increases next year, leads me to forecast a 4.4 percent increase in real prices by the end of next year," Fleming said. 2.2 million homeowners, which makes up 4.4 percent, are in negative equity—making it the lowest number since early 2007. Source: Black Knight Mortgage Monitor STAT INSIGHT 4.4

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