Home Values Up 5.7% Over Q1 2013

23 Apr

If you’re looking to sell a house in 2014, the latest word on home value prices should strike you as good news. Zillow [1]’s Q1 Real Estate Market Report [2], released Tuesday, shows that home values across the United States are up 5.7 percent (to a national median of $169,800) compared to Q1 2013. This marks the 21st consecutive month that prices, compared year-over-year, have gone up.

Even more encouraging is that home values in 527 U.S. cities that saw declines of 10 percent or more during the recession are either at their peak or soon will be. Zillow also expects that home values in 1,000 metro areas will finish the year higher than ever.

Though not connected, the Zillow report was released the day before the Federal Housing Finance Agency [3] released its February House Price Index [4] report, which corroborates the 21-month uptick Zillow reported and also finds that housing prices nationally were up 6.9 percent that month.

But though market prices are up and climbing, national home values remain 13.5 percent below their 2007 peak. Still, barely 30 months after home values nationally plummeted nearly 23 percent, the recession’s grip has eased on about one-fifth of U.S. cities that Zillow monitors. “This is a remarkable milestone coming only two and a half years after the end of the worst housing recession since the Great Depression,  said Stan Humphries, Zillow’s chief economist. “This is a testament to just how robust this housing recovery has been.”

The largest increases, according to Zillow, occurred in Riverside, Calif., and Las Vegas, where home values rose more than 22 percent compared to Q1 2013. Though neither market is expected to finish the year at peak, Zillow expects home values in Riverside to increase another 12 percent this year, in the report’s most optimistic projection. Las Vegas is expected to increase a further 6 percent.

Texas, however, leads the field in having reached market peak already. According to Zillow, home values in Houston, Dallas-Fort Worth, and Austin have returned to their 2007 glory and are expected to climb roughly 4 percent throughout this year.

But while this news is encouraging for sellers, the steady climb in home values comes with its share of baggage for buyers. In a fairly clear market yin-yang, the increase in home values has accompanied a stead drop in availability. Zillow reported that inventory fell in March for the first time in six months and is down 0.5 percent year-over-year. This, at a time when mortgage interest rates are rising with home prices, could create affordability problems for buyers.

In most metros, Zillow reported, housing affordability is and will remain strong even as prices continue to rise. But homes in a handful of metros—particularly in the major California markets—are already unaffordable, as residents are contributing a larger share than ever of their salaries to pay down mortgages.

Though mortgage rates remain quite low, Humphries said, they won’t stay that way forever. He also points out that rents nationally are on the rise (though not at the same pace as home prices), and some markets could become unaffordable to those looking to live or stay in desirable metro areas, such as Bay Area, California.

“As affordability worsens, more residents will be forced to search for affordable housing farther from urban job centers,” Humphries said. And if that happens? “Home values in some areas may have to come down.”


Article printed from DSNews.com: http://dsnews.com

URL to article: http://dsnews.com/home-values-rise-remain-07-peak/

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