Housing Market Looking Up in Q2, but Bumpy Road Will Continue

The housing market gave off plenty of positive signs in the second quarter, with national home values falling at the slowest rate we’ve seen in four years, and with home values increasing in about two-thirds of the markets covered by Zillow.

To be precise, the national Zillow Home Value Index (ZHVI), which measures the median value of all homes, fell 0.4% from the first to the second quarter, and the ZHVI increased in 94 of the 154 markets tracked by Zillow, according to our Q2 Real Estate Market Reports.

That’s great news that many have been waiting to hear, but it’s important to look at the big picture and take these improvements as a positive sign, but not a definitive sign that we’ve reached bottom or are in recovery.

Our Chief Economist Dr. Stan Humphries says in his brief over on the Zillow Research Page:

“In short, people are anxious for a recovery, and they’re likely to look at the near-term results because they are positive, but it’s important to look at the whole picture. We can’t be short-sighted. This quarter’s performance is encouraging certainly, but one positive quarter does not a recovery make. There are a lot of factors playing into the market right now – a still weak job market, a full foreclosure pipeline, fragile consumer sentiment, and signs of renewed weakness in overall economic output.  In contrast to prior economic recoveries, housing will be less a catalyst for healing and more a product of these various other factors.”

That all said, this quarter’s results are certainly encouraging, especially because they came without the aid of homebuyer tax credits, like those that propped up the market during much of last year. We’ll continue to watch closely.