Zillow's 2nd quarter Real Estate Market Report, released today, show home values increased 2.4% from the first quarter of 2013 to quarter two of 2013 to $161,100. ? This quarter marks the biggest yearly gain since Aug 2006 and biggest quarterly gain since quarter 4 of 2005. On an annual basis, the Zillow Home Worth Index (ZHVI) rose 5.8% from June 2012 levels.
Monthly appreciation remains strong with state home values growing by 0.9% from May. Not only did the speed of home price appreciation quicken in Q2, but the recovery also fully took hold countrywide. Markets in some areas of the Northeast, Midwest and Southeastern US, for example Atlanta, Chicago and St. Louis, that had formerly been slow to turn the corner began to appreciate, which helped boost the general state market. All the top 30 biggest metro areas covered experienced annual appreciation in home values as of the end of Q2, and all have hit their bottom.
In the opinion of the Zillow Home Price Prediction (ZHVF), we predict state home values to extend 5% over the next year (June 2013 to June 2014). Of the 257 markets covered by the Zillow Home Worth Forecast, 241 markets are expected to see increases in home values over the following year, with the largest increases predicted in the Sacramento metro (18.9%) and the Riverbank metro (16.6%). Many California markets follow closely at the top of the list of markets expected to see the highest home price appreciation over the following year. According to the ZHVF, 234 markets (91%) have already hit a bottom in home values, and another 13 are expected to hit a bottom by June 2014.
Home Values
The Zillow Real Estate Market Reports cover 389 metropolitan and micropolitan areas (metros) of which 259 showed quarterly home price appreciation. 3 metros remained flat, while 127 metros show home values losses. Roughly 72% of the metros covered by the Real Estate Market Reports posted yearly increases in home values â€" a sign of the nation's housing recovery continuing to take hold. Among the largest metros, Sacramento showed the biggest yearly increase with home values rising 29.5% from Q2 of 2012 to quarter two of 2013. We do believe that appreciation rates will return to more sustainable levels over the next year or two. Overall, nationwide home values are back to August 2004 levels, down 17.2% since their peak in May 2007.
Rents
The Zillow Lease Index (ZRI) covers 496 metro areas, and 57% of those metros reported yearly increases in rents in June. As a point of comparison, almost 72% of the metro areas covered by the ZHVI experienced yearly home price increases. Nationally, hires increased 1.6% in June from year-ago levels, implying a slowing. This is a serious annual decline in the rental appreciation rate from its peak appreciation of 6.2% nationally in Sep 2012.
This development mixed with rising home values is another contributor to financiers exiting some markets as they'd frequently purchased for-sale inventory to convert them to for-rent properties. Markets that continue to see very robust year-over-year lease increases include Cincinnati (10.5%), Denver (5.5%) and Boston (4.3%).
Foreclosures
The rate of homes foreclosed continued to decrease in June with 4.96 out of every 10,000 houses in the country being liquidated through foreclosure. Nationally, foreclosure resales stay low, making up 9.53% of all sales in June, down 3.6 p.c. points from the second quarter of 2012, underlining the limited inventory of foreclosure resales. For-sale inventory levels remain constrained, with many metro areas across the land having less for-sale listings available in June compared with last year, although limits are beginning to ease. The absence of foreclosure resales and standard for-sale inventory in numerous markets is making a contribution to home price appreciation. In the second half of the year we are expecting continued easing with speculators beginning to slowly exit markets. As home values continue to climb.
Outlook
With the housing recovery in force, many house owners are feeling a feeling of whiplash after years of depreciation, but this type of market behavior will not last. Stockholders are beginning to pull out of some markets â€" as home values are climbing higher â€" and regular purchasers are coming back, now that they can be competitive again. Although, some customers are beginning to feel the cut in buying power due to higher mortgage rates. More for-sale inventory is slowly coming on line, as homes are freed from negative equity and more house owners are deciding to sell. Both of these developments will contribute to slowdowns in appreciation toward more viable rates.
The US ?housing market? In total is currently not experiencing a bubble, but in several places it may feel just like one, with some markets (Sacramento, Las Vegas, San Francisco) experiencing yearly home price appreciation approaching 30%. In some overheated markets, fast home worth increases joined with rising mortgage rates will lead directly to housing prices and financing costs outrunning local income expansion, which should also contribute to a moderation of the market.
Monthly appreciation remains strong with state home values growing by 0.9% from May. Not only did the speed of home price appreciation quicken in Q2, but the recovery also fully took hold countrywide. Markets in some areas of the Northeast, Midwest and Southeastern US, for example Atlanta, Chicago and St. Louis, that had formerly been slow to turn the corner began to appreciate, which helped boost the general state market. All the top 30 biggest metro areas covered experienced annual appreciation in home values as of the end of Q2, and all have hit their bottom.
In the opinion of the Zillow Home Price Prediction (ZHVF), we predict state home values to extend 5% over the next year (June 2013 to June 2014). Of the 257 markets covered by the Zillow Home Worth Forecast, 241 markets are expected to see increases in home values over the following year, with the largest increases predicted in the Sacramento metro (18.9%) and the Riverbank metro (16.6%). Many California markets follow closely at the top of the list of markets expected to see the highest home price appreciation over the following year. According to the ZHVF, 234 markets (91%) have already hit a bottom in home values, and another 13 are expected to hit a bottom by June 2014.
Home Values
The Zillow Real Estate Market Reports cover 389 metropolitan and micropolitan areas (metros) of which 259 showed quarterly home price appreciation. 3 metros remained flat, while 127 metros show home values losses. Roughly 72% of the metros covered by the Real Estate Market Reports posted yearly increases in home values â€" a sign of the nation's housing recovery continuing to take hold. Among the largest metros, Sacramento showed the biggest yearly increase with home values rising 29.5% from Q2 of 2012 to quarter two of 2013. We do believe that appreciation rates will return to more sustainable levels over the next year or two. Overall, nationwide home values are back to August 2004 levels, down 17.2% since their peak in May 2007.
Rents
The Zillow Lease Index (ZRI) covers 496 metro areas, and 57% of those metros reported yearly increases in rents in June. As a point of comparison, almost 72% of the metro areas covered by the ZHVI experienced yearly home price increases. Nationally, hires increased 1.6% in June from year-ago levels, implying a slowing. This is a serious annual decline in the rental appreciation rate from its peak appreciation of 6.2% nationally in Sep 2012.
This development mixed with rising home values is another contributor to financiers exiting some markets as they'd frequently purchased for-sale inventory to convert them to for-rent properties. Markets that continue to see very robust year-over-year lease increases include Cincinnati (10.5%), Denver (5.5%) and Boston (4.3%).
Foreclosures
The rate of homes foreclosed continued to decrease in June with 4.96 out of every 10,000 houses in the country being liquidated through foreclosure. Nationally, foreclosure resales stay low, making up 9.53% of all sales in June, down 3.6 p.c. points from the second quarter of 2012, underlining the limited inventory of foreclosure resales. For-sale inventory levels remain constrained, with many metro areas across the land having less for-sale listings available in June compared with last year, although limits are beginning to ease. The absence of foreclosure resales and standard for-sale inventory in numerous markets is making a contribution to home price appreciation. In the second half of the year we are expecting continued easing with speculators beginning to slowly exit markets. As home values continue to climb.
Outlook
With the housing recovery in force, many house owners are feeling a feeling of whiplash after years of depreciation, but this type of market behavior will not last. Stockholders are beginning to pull out of some markets â€" as home values are climbing higher â€" and regular purchasers are coming back, now that they can be competitive again. Although, some customers are beginning to feel the cut in buying power due to higher mortgage rates. More for-sale inventory is slowly coming on line, as homes are freed from negative equity and more house owners are deciding to sell. Both of these developments will contribute to slowdowns in appreciation toward more viable rates.
The US ?housing market? In total is currently not experiencing a bubble, but in several places it may feel just like one, with some markets (Sacramento, Las Vegas, San Francisco) experiencing yearly home price appreciation approaching 30%. In some overheated markets, fast home worth increases joined with rising mortgage rates will lead directly to housing prices and financing costs outrunning local income expansion, which should also contribute to a moderation of the market.
About the Author:
Marco Santarelli is an investor, author and founder of Norada Real Estate Investments â€" a nationwide real estate investment firm providing turnkey investment property in growth markets around the US. "State of the U.S. Housing Market" was originally published on the Real Estate Investing Blog.
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