Home values rose 5.9% in last quarter of 2012

home-values-concept

Zillow’s most recent Home Value Index report indicated home values in the country rose 5.9% in 2012 from the previous year, and the best annual gain since 2006.

In the fourth quarter, home values rose 2.5% from the third quarter, up to a $157,400 average. Of the largest metros surveyed, 69% saw annual home value gains last year. Foreclosure activity also declined, dropping 12% from 16% at the end of 2011.

Even with the positive gains in home values last year, the new year is anticipated to see a more sustainable 3.3% appreciation rate, which Zillow sees as being more tempered.

Based on these numbers, Zillow projects a 3.3% rise in home values for 2013, a rise that will bring us up to the norm.

Housing prices expected to rise in the next four years

lsenomicsHomePriceExpectationsbySurvey092012

A survey conducted on behalf of Zillow in August and September has found that the majority of economists in the survey are increasingly optimistic that home prices will continue to rise steadily over the next four years.

From Realtor Magazine: “The economists surveyed expect home prices to rise 2.3 percent this year over the fourth-quarter of 2011, according to the survey conducted on behalf of Zillow. In 2013, they expect prices to rise 4.7 percent; 8 percent in 2014; 11.4 percent in 2015; and 15.2 percent in 2016.”

The survey also reveals that more than half favor the elimination of mortgage interest tax deduction.

The optimism is a very good sign that we’re on the road to recovery. Stan Humphries, Zillow's chief economist, says "It's refreshing to see this optimism at a time when the market seems to be making an organic recovery, in the absence of an artificial stimulant like the tax credits."

Zillow's housing predictions for 2013

ForecastChartJuneQ2

Zillow just released its predictions for the housing market in 2013, saying that just under half of the markets it covers will experience an increase in home values over the next 12 months.

The graph below illustrates the Zillow estimate for Los Angeles, showing current housing price averages at $383,200, and increasing 0.5% over the next year.

Los-Angeles_HomeValue2013

Considering all the economic difficulties with a dwindling job market and debt problems in Europe, a stabilized housing market is something to look forward to in the next year.

Rent prices on the rise as home values decline, according to Zillow

Zillow_graph_0315b

Proving that more people are renting rather than going into homeownership, Zillow reports that rent prices went up 3% in 2011, while home values dropped 4.6%.

“While it seems that rents are rising at the expense of home values, the opposite is true. A thriving rental market will stimulate home sales as investors snap up low-priced inventory to convert to rentals,” said chief economist for Zillow Dr. Stan Humphries in a release (via DSNews.com).

This could have something to do with the government's Real-Estate Owned (REO) pilot program, launched in August 2011, which put nearly 2,500 foreclosures up for sale in February 2012 to pre-qualified investors. The investors would then convert the properties into rental units, thus hopefully stabilizing neighborhoods and reducing the number of foreclosures on the market. Nearly all of those foreclosed homes that are part of the pilot program are located in Los Angeles.

With the Zillow Rent Index, we are now able to quantify exactly how the rental market is growing across the country.