The Reason Home Prices Keep Rising in These Cities

Spencer Rascoff, CEO of Zillow, weighs in on the housing market.

May 25, 2014 at 12:45PM

After bottoming out following the financial crisis, home prices in the United States have jumped around 20% higher. The reason behind the rising prices is the lack of supply in many markets coupled with moderate demand and low mortgage rates. 

In the following video, Motley Fool analyst Brendan Byrnes sits down with Spencer Rascoff, CEO of Zillow, to discuss the state of the housing market. Rascoff highlights the fact that around 20% of all mortgage holders in the U.S. have no equity in their homes, which means they can't list their home, even if they want to. The lack supply may only be a temporary issue in some markets because eventually more inventory will come online and home builders will build more inventory.

However, Rascoff points out why New York and San Francisco have different dynamics at work. In Manhattan, there's only one place to go, which is up, and and in the Bay Area, home builders are geographically constrained by the typography and the geography of that area.

Finally, Byrnes and Rascoff touch on mortgage rates and why higher rates will hamper demand, somewhat, over the next twelve months, but if you take the long-term view, again, they're still pretty low rates.

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Brendan Byrnes has no position in any stocks mentioned. The Motley Fool recommends Zillow. The Motley Fool owns shares of Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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