Zillow?s November Real Estate Market Reports, released today, show that national home values rose 0.6% from October to November to $156,200 (Figure 1). November 2012 marks the 13th consecutive month of home value appreciation. On a year-over-year basis, home values were up by 5.2% (Figure 2) in November 2012 ? a rate of annual appreciation we haven?t seen since August 2006 (when the rate was 6%), before the peak of the housing bubble. Rents are still appreciating, currently at 4.5% on a year-over-year level (Figure 3). The Zillow Home Value Forecast, which is now available on a monthly basis, calls for 2.5% appreciation nationally from November 2012 to November 2013. Most markets have already hit a bottom ? with only 10 out of 255 not projected to hit a bottom within the next year ? and 46 out of the 255 markets covered are forecasted to experience home value appreciation of 3% or higher.
Home Values
The November Zillow Real Estate Market Reports, the first measure of November national home value trends available anywhere, cover 361 metropolitan and micropolitan areas, more markets than any other available source of real estate data. In November, 214 (59%) of the 361 markets showed monthly home value appreciation, and 226 (63%) of the 361 markets saw annual home value appreciation. Among the top 30 metros, 25 experienced monthly home value appreciation and 26 saw annual increases. The only annual declines among the top 30 metros took place in Chicago (-1.4%), Atlanta (-1.4%), Philadelphia (-0.4%) and New York (-0.3%). Leading the pack in positive monthly appreciation were Sacramento, Detroit, Phoenix and San Francisco, which experienced 1.8%, 1.5%, 1.4%, and 1.4% monthly home value appreciation, respectively. Overall, national home values were down 19.4% from their peak in May 2007 and up 5.3% from the post-recession trough in October 2011.
Rents
The Zillow Rent Index (ZRI) covers 436 metropolitan areas and shows year-over-year gains for 290 metropolitan areas covered by the ZRI. Even as the housing market picks up steam again, the rental market remains strong (Figure 3). Markets that saw extremely strong annual rent appreciation include Chicago (7.3%), Boston (7.1%), Pittsburgh (6.4%), Baltimore (6.3%) and San Francisco (5.8%). Part of the reason the for-sale market has been seeing such strong home value appreciation in some California markets, Phoenix and Florida markets (among others) is that investors have been buying for-sale properties, mostly distressed, and have been converting them to for-rent units to satisfy increased demand since the housing bubble burst.
Foreclosures
The rate of homes foreclosed continued to decline in November with 5.26 out of every 10,000 homes in the country being liquidated. Nationally, foreclosure re-sales continued to fall, making up 12.4% of all sales in November (Figure 4). This is down 3.8 percentage points from November 2011.
Outlook
As we are nearing the end of 2012, it?s safe to say that 2012 was indeed a transitional year as we had predicted at the end of 2011. Home values rose much stronger than we thought ? up 5.3% from the October 2011 bottom in home values. We are in the midst of a housing recovery, and the majority of markets across the nation have hit a bottom in home values. The Zillow Home Value Forecast calls for 2.5% appreciation nationally from November 2012 to November 2013. The rental market was indeed a bright spot in 2012, with rental values appreciating throughout the year compared to the prior year. This rental appreciation spurred investor interest (wanting to convert distressed single family residences into rental units), which in turn translated into rising home value appreciation in the for sale market in many markets across the nation.?Negative equity is now below 30 percent (28.2%) nationally and is trending down. The year-end ?fiscal cliff? remains a risk factor in our forecast, as it will likely create uncertainty with consequences for consumer confidence and employment growth and, if not successfully navigated, will create real disruptions in the economy.
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