Zillow's second quarter Real Estate Market Report, released today, show home values increased 2.4% from quarter one of 2013 to quarter two of 2013 to $161,100. ? This quarter marks the largest annual gain since Aug 2006 and biggest quarterly gain since quarter 4 of 2005. On a yearly basis, the Zillow Home Price 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 value appreciation quicken in the 2nd quarter, but the recovery also absolutely took hold nationwide. Markets in some areas of the Northeast, Midwest and Southeastern US, for example Atlanta, Chicago and St. Louis, that had previously been slow to turn the corner began to appreciate, which helped galvanize the national market. All the top 30 largest metro areas covered experienced annual appreciation in home values as of the end of the second quarter, and all have hit their bottom.
In the opinion of the Zillow Home Worth Forecast (ZHVF), we expect state home values to increase 5% over the following year (June 2013 to June 2014). Of the 257 markets covered by the Zillow Home Price Forecast, 241 markets are anticipated to see increases in home values over the next year, with the largest increases anticipated 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 predicted to see the highest home price appreciation over the following year. According to the ZHVF, 234 markets (91%) have just hit a bottom in home values, and another 13 are predicted 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 worth appreciation. Three 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€" a sign 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 quarter 2 of 2012 to quarter 2 of 2013. We do accept that appreciation rates will return to more viable levels over the next year or two. Overall, countrywide home values are back to Aug 2004 levels, down 17.2% since their top in May 2007.
Rents
The Zillow Lease Index (ZRI) covers 496 metro areas, and 57% of those metros reported annual 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, leases increased 1.6% in June from year-ago levels, denoting a slowing. This is a significant yearly decline in the rental appreciation rate from its peak appreciation of 6.2% nationally in September 2012.
This development combined with rising home values is another contributor to backers exiting some markets as they'd regularly bought for-sale inventory to convert them to for-rent properties. Markets that continue seeing extremely 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 each 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 p.c. points from the second quarter of 2012, underlining the limited inventory of foreclosure resales. For-sale inventory levels remain restricted, with numerous metro areas across the land having less for-sale lists available in June compared to last year, though constraints are starting to ease. The lack of foreclosure resales and normal for-sale inventory in numerous markets is contributing to home value appreciation. In the second 1/2 the year we predict continued easing with stockholders beginning to slowly exit markets. As home values continue to climb.
Outlook
With the housing recovery in full force, many homeowners are feeling a sense of whiplash after years of depreciation, but this type of market behavior won't last. Backers 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 consumers 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 liberated from negative equity and more homeowners are choosing to sell. Both of these developments will make a contribution to slowdowns in appreciation towards more tolerable rates.
The US ?housing market? As a whole is currently not experiencing a bubble, but in many places it may feel just like one, with some markets (Sacramento, Las Vegas, San Francisco) experiencing annual home value 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 outpacing local earnings growth, which may also make a contribution 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 value appreciation quicken in the 2nd quarter, but the recovery also absolutely took hold nationwide. Markets in some areas of the Northeast, Midwest and Southeastern US, for example Atlanta, Chicago and St. Louis, that had previously been slow to turn the corner began to appreciate, which helped galvanize the national market. All the top 30 largest metro areas covered experienced annual appreciation in home values as of the end of the second quarter, and all have hit their bottom.
In the opinion of the Zillow Home Worth Forecast (ZHVF), we expect state home values to increase 5% over the following year (June 2013 to June 2014). Of the 257 markets covered by the Zillow Home Price Forecast, 241 markets are anticipated to see increases in home values over the next year, with the largest increases anticipated 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 predicted to see the highest home price appreciation over the following year. According to the ZHVF, 234 markets (91%) have just hit a bottom in home values, and another 13 are predicted 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 worth appreciation. Three 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€" a sign 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 quarter 2 of 2012 to quarter 2 of 2013. We do accept that appreciation rates will return to more viable levels over the next year or two. Overall, countrywide home values are back to Aug 2004 levels, down 17.2% since their top in May 2007.
Rents
The Zillow Lease Index (ZRI) covers 496 metro areas, and 57% of those metros reported annual 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, leases increased 1.6% in June from year-ago levels, denoting a slowing. This is a significant yearly decline in the rental appreciation rate from its peak appreciation of 6.2% nationally in September 2012.
This development combined with rising home values is another contributor to backers exiting some markets as they'd regularly bought for-sale inventory to convert them to for-rent properties. Markets that continue seeing extremely 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 each 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 p.c. points from the second quarter of 2012, underlining the limited inventory of foreclosure resales. For-sale inventory levels remain restricted, with numerous metro areas across the land having less for-sale lists available in June compared to last year, though constraints are starting to ease. The lack of foreclosure resales and normal for-sale inventory in numerous markets is contributing to home value appreciation. In the second 1/2 the year we predict continued easing with stockholders beginning to slowly exit markets. As home values continue to climb.
Outlook
With the housing recovery in full force, many homeowners are feeling a sense of whiplash after years of depreciation, but this type of market behavior won't last. Backers 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 consumers 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 liberated from negative equity and more homeowners are choosing to sell. Both of these developments will make a contribution to slowdowns in appreciation towards more tolerable rates.
The US ?housing market? As a whole is currently not experiencing a bubble, but in many places it may feel just like one, with some markets (Sacramento, Las Vegas, San Francisco) experiencing annual home value 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 outpacing local earnings growth, which may 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 U. S.. "State of the U.S. Housing Market" was originally printed on the Real Estate Investing Blog.