It is April which means spring housing season is underway but years after the crash is the housing market finally getting back to normal? Are there any signs that we can see that this pesky supply issue is finally loosening for us? CEO of Zillow Spencer Rascoff said supply is starting to come online the story of housing for the last couple years has just been that there's too much demand and not enough supply. Finally apartment building managers and real estate developers are building new apartment inventory and home builders to bring a single-family inventory online. Zillow data says that home values were increasing about 5% year-over-year we're now starting to moderate around 2 to 4% year-over-year and that's because of new supply coming.
How much is that help coming from new construction, of new homes being built, and how much of that is a demographic shift where older home owners are starting to downsize and move out of the house as if they lived in for a long time? Spencer said what's happening on single family is that people are getting pulled out of negative equity for so long since the bubble burst negative equity rates were very high 20 to 30% of all mortgage holders were upside down on their home loan and today it's in the tieths and so as a result of the last negative equity more traditional home owners can list their home. That's good and then of course you have property managers building new inventory apartment building inventory. Zillow is out with the report on what are the hottest apartment rental markets and these are places where rents are rising very quickly and new apartment supply is coming online. Very quickly places like Seattle, Denver, Portland, Columbus Ohio with number one. Thankfully and finally real estate developers are building new inventory.
More than many times we can recall a time when friends got money burning a hole in their pockets. They want to buy something they feel like a good time to buy but there just isn't the inventory out there at the price that they're willing to pay, how does this resolve itself? Do the prices eventually stagnate come down? Does more inventory come onto the market and force prices down to these buyers? Or they just decide to wait and go away for a while? Spencer said It's definitely a seller's market there's just not enough inventory still in a lot of parts of the country you see multiple bids for what little inventory there is we have about 9% fewer homes for sale today than we did even a year ago. The way it resolves itself is home builders at apartment management companies build new inventory and as home values rise people get pulled out of negative equity that creates more it's ability to list. It's starting to happen it is important to remember what we're experiencing now that was not like the last housing bubble the last housing bubble 2005 - 2007 wasn't so much a housing bubble is a credit bubble. People got mortgages who weren't supposed to get mortgages and as a result home values got inflated. What we're experiencing now is really just regular housing appreciation because you have demand exceeds supply, home values increase more supply comes online as negative equity alleviates and new construction happen. This is a healthy market this is actually what normal real estate is supposed to be like is this type of Market.
Why is 60% of U.S. counties are considered unaffordable? People joke that no one really can afford to live in Palo Alto or Brooklyn or Manhattan but how can you have housing become more affordable without going through a broader housing reset when 60% of counties are priced that high? Spencer said the problem really is actually with the rents are actually unaffordable as compared with buying and we've crunched the data lots of different ways and what we've seen is that it is relatively more affordable to buy then to rent right now. That situation being alleviated is once more multi-family inventory comes online that will bring rents down but for now its rents that are totally unaffordable.