More Good News: Home Values on Way UpMarch 5th, 2013 by DWM Magazine
While declining home values were just another sign of a depressed housing market, this is another housing indicator, now on the rise. Dr. Svenja Gudell, senior economist with Zillow, reported recently that home values are up and showing signs of improvement. The report is produced by Zillow’s economics and analytics group, and compiles housing data and econometric analysis on more than 360 markets.
“A sustainable housing recovery has taken hold, benefiting buyers and sellers alike, as well as professionals in the housing industry,” said Dr. Gudell. “Metro areas are showing historically high affordability and home values are steadily increasing after prolonged decline. Though negative equity remains a problem, we think this year will continue to bolster confidence in the market’s resurgence.”
According to Zillow’s data, cumulative U.S. home value increased for the first time in more than five years, gaining $1.3 trillion in 2012. After this encouraging 6-percent increase from 2011’s $792-billion loss, Zillow is predicting that the cumulative U.S. home value will increase again in 2013.
Median home values also saw a steady increase in 2012, after losing 23 percent (peak to trough) of their total value since they peaked in May 2007, according to Zillow’s report. Coming in at $156,200, average home values are now back to 2004 levels after hitting a low in 2011. Combined with predicted increases in cumulative home value, Zillow is optimistic that an average home value recovery can continue into 2013 and have an impact on the stubbornly high amount of underwater mortgages in the U.S.
Another good news item is that foreclosures have come down significantly. There aren’t as many foreclosure discounts going on and these discounts have disappeared from some markets completely.
“All of us thought we would have a very slow recovery but it has actually been rather strong,” she said.
Gudell even hinted to an under supply in some markets and the existence of bidding wars. “Looking at mortgage rates and affordability index we are doing extremely well right now,” she added.
With all this positive news she did say the “downer” is there still is a lot of negative equity.
“The decline in home values has caused a whole lot of negative equity,” she said. “In Las Vegas one out of four homeowners was under water for example.”
The Zillow presentation was given at a recent industry event as part of Ply Gem’s ProTalk Education Series.