Zillow's 2nd quarter Real Estate Market Report, released today, show home values increased 2.4% from quarter 1 of 2013 to quarter two of 2013 to $161,100. ? This quarter marks the largest annual gain since August 2006 and largest quarterly gain since the 4th quarter of 2005. On a once a year basis, the Zillow Home Price Index (ZHVI) rose 5.8% from June 2012 levels.
Monthly appreciation remains robust with national home values growing by 0.9% from May. Not only did the pace of home price appreciation quicken in the second quarter, but the recovery also absolutely took hold across the nation. 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 national market. All of the top 30 biggest metro areas covered experienced annual appreciation in home values as of the end of quarter 2, and all have hit their bottom.
According to the Zillow Home Price Forecast (ZHVF), we predict national 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 predicted to see increases in home values over the next year, with the largest increases expected in the Sacramento metro (18.9%) and the Riverside metro (16.6%). Many California markets follow closely at the top of the list of markets expected to see the highest home worth appreciation over the following year. In the opinion of 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 urban and micropolitan areas (metros) of which 259 showed quarterly home worth appreciation. 3 metros stayed 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€" an indication of the nation's housing recovery continuing to take hold. Among the largest metros, Sacramento showed the biggest annual increase with home values rising 29.5% from the second quarter of 2012 to quarter 2 of 2013. We do accept that appreciation rates will return to more viable levels over the next year or 2. Overall, national home values are back to Aug 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 annual increases in leases in June. As a point of comparison, nearly 72% of the metro areas covered by the ZHVI experienced annual home price increases. Nationally, rents 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 combined with rising home values is another contributor to backers exiting some markets as they'd frequently acquired for-sale inventory to convert them to for-rent properties. Markets that continue seeing very powerful year-over-year hire increases include Cincinnati (10.5%), Denver (5.5%) and Boston (4.3%).
Foreclosures
The rate of homes foreclosed continued to fall in June with 4.96 out of every 10,000 homes in the country being liquidated through foreclosure. Nationally, foreclosure resales remain low, making up 9.53% of all sales in June, down 3.6 % points from Q2 of 2012, underlining the limited stock of foreclosure resales. For-sale inventory levels remain constrained, with numerous metro areas across the country having fewer for-sale listings available in June compared with last year, although limits are starting to ease. The absence of foreclosure resales and standard for-sale inventory in many markets is contributing to home worth appreciation. In the second half the year we predict continued easing with speculators beginning to slowly exit markets. As home values continue to climb.
Outlook
With the housing recovery in full force, many house owners are feeling a feeling of whiplash after a period of depreciation, but this kind of market behaviour won't last. Backers are starting 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 consumers are beginning to feel the cut in buying power due to higher mortgage rates. More for-sale inventory is relentlessly coming on line, as houses are freed from negative equity and more householders are choosing to sell. Both of these developments will make a contribution to slowdowns in appreciation toward more tolerable rates.
The US ?housing market? In total is at present not experiencing a bubble, but in numerous places it may feel a bit like one, with some markets (Sacramento, Las Vegas, San Francisco) experiencing yearly home price appreciation approaching 30%. In some overheated markets, quick home worth increases coupled with rising mortgage rates will lead directly to housing prices and financing costs overtaking local earnings growth, which should also make a contribution to a moderation of the market.
Monthly appreciation remains robust with national home values growing by 0.9% from May. Not only did the pace of home price appreciation quicken in the second quarter, but the recovery also absolutely took hold across the nation. 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 national market. All of the top 30 biggest metro areas covered experienced annual appreciation in home values as of the end of quarter 2, and all have hit their bottom.
According to the Zillow Home Price Forecast (ZHVF), we predict national 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 predicted to see increases in home values over the next year, with the largest increases expected in the Sacramento metro (18.9%) and the Riverside metro (16.6%). Many California markets follow closely at the top of the list of markets expected to see the highest home worth appreciation over the following year. In the opinion of 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 urban and micropolitan areas (metros) of which 259 showed quarterly home worth appreciation. 3 metros stayed 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€" an indication of the nation's housing recovery continuing to take hold. Among the largest metros, Sacramento showed the biggest annual increase with home values rising 29.5% from the second quarter of 2012 to quarter 2 of 2013. We do accept that appreciation rates will return to more viable levels over the next year or 2. Overall, national home values are back to Aug 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 annual increases in leases in June. As a point of comparison, nearly 72% of the metro areas covered by the ZHVI experienced annual home price increases. Nationally, rents 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 combined with rising home values is another contributor to backers exiting some markets as they'd frequently acquired for-sale inventory to convert them to for-rent properties. Markets that continue seeing very powerful year-over-year hire increases include Cincinnati (10.5%), Denver (5.5%) and Boston (4.3%).
Foreclosures
The rate of homes foreclosed continued to fall in June with 4.96 out of every 10,000 homes in the country being liquidated through foreclosure. Nationally, foreclosure resales remain low, making up 9.53% of all sales in June, down 3.6 % points from Q2 of 2012, underlining the limited stock of foreclosure resales. For-sale inventory levels remain constrained, with numerous metro areas across the country having fewer for-sale listings available in June compared with last year, although limits are starting to ease. The absence of foreclosure resales and standard for-sale inventory in many markets is contributing to home worth appreciation. In the second half the year we predict continued easing with speculators beginning to slowly exit markets. As home values continue to climb.
Outlook
With the housing recovery in full force, many house owners are feeling a feeling of whiplash after a period of depreciation, but this kind of market behaviour won't last. Backers are starting 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 consumers are beginning to feel the cut in buying power due to higher mortgage rates. More for-sale inventory is relentlessly coming on line, as houses are freed from negative equity and more householders are choosing to sell. Both of these developments will make a contribution to slowdowns in appreciation toward more tolerable rates.
The US ?housing market? In total is at present not experiencing a bubble, but in numerous places it may feel a bit like one, with some markets (Sacramento, Las Vegas, San Francisco) experiencing yearly home price appreciation approaching 30%. In some overheated markets, quick home worth increases coupled with rising mortgage rates will lead directly to housing prices and financing costs overtaking local earnings growth, which should also make a contribution 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 United States. "State of the U.S. Housing Market" was originally published on the Real Estate Investing Blog.
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