Zillow’s April Real Estate Market Reports, released today, show that national home values rose 0.5% from March to April to $158,300 (Figure 1). On a year-over-year basis, home values were up 5.2% (Figure 2) from April 2012. The last time national home values were at this level was in June 2004. Rents were up 3.9% on a year-over-year basis (Figure 3). The Zillow Home Value Forecast calls for 4% appreciation nationally from April 2013 to April 2014. Most markets have already hit a bottom – with only 7 out of 251 not projected to hit a bottom within the next year – and 65 out of the 251 markets covered are forecasted to experience home value appreciation of 4% or higher. Currently, many California markets, which were particularly hard hit during the housing recession, are experiencing strong appreciation and are also forecasted to keep appreciation at a fast clip over the next year.
The April Zillow Real Estate Market Reports cover 365 metropolitan and micropolitan areas. In April, 202 (55%) of the 365 markets showed monthly home value appreciation, and 266 (73%) of the 365 markets saw annual home value appreciation. Among the top 30 metros, 27 of them experienced monthly home value appreciation, and 29 of them experienced annual increases with only Chicago (0.2% down) showing declining home values over the past year. Leading the pack in positive monthly appreciation were Sacramento, Las Vegas, San Jose and San Francisco, which experienced 3.4%, 3%, 2.8% and 2.8% monthly home value appreciation, respectively. Overall, national home values were down 18.7% from their peak in May 2007 and up 6.7% from the post-recession trough in October 2011.
The Zillow Rent Index (ZRI) covers 484 metropolitan and micropolitan areas and shows year-over-year gains for 344 metropolitan areas covered by the ZRI. The rental market remains strong (Figure 3), despite decelerating annual appreciation. Markets that saw extremely strong annual rent appreciation include Denver (9.1%), Boston (5.9%), Portland (5.8%) and San Francisco (5.3%). Demand for rental housing remains strong, and many investors continue to purchase homes (many times lower-priced homes or distressed inventory) and convert these properties into rental units. Many markets are seeing tight inventory and sharp home value appreciation in part brought on by active investors. Nationally, rents were up 3.9% in April on a year-over-year basis.
The rate of homes foreclosed continued to decline in April with 4.8 out of every 10,000 homes in the country being liquidated. The last time it was at this rate was in September 2011. Nationally, foreclosure resales also continued to fall, making up 12% of all sales in April (Figure 4). This is down 4 percentage points from April 2012 and down 7.9 percentage points from its peak level of 19.9% in March 2009.
We continue to expect home value appreciation to moderate throughout the year, especially in regions where appreciation has been particularly strong. Some markets will have stronger appreciation for longer than others as investor activity and inventory constraints greatly vary across markets. The Zillow Home Value Forecast calls for 4% appreciation nationally from April 2013 to April 2014. Negative equity as of the end of 2012 stands at 27.5% nationally and is trending down as home values increase. In 2012, almost 2 million homeowners were freed from negative equity. Unfortunately, high levels of negative equity will remain with us for the next few years given the extent of home value declines in hard-hit markets such as Phoenix and Las Vegas. While we do expect some additional supply of homes on the market this year as new construction continues to ramp up and as many of those recently freed from negative equity choose to sell their homes, we expect demand to continue to outpace even this increase in supply, therefore leading to continued inventory shortages in some markets. There recently have been signs of easing in terms of inventory constraints, but again this greatly varies by market. In April, housing inventory was 14.4% tighter nationally than in April of last year, and this shortage in listing supply will continue to put upward pressure on home values in some regions.
A PDF version of this report can be downloaded here.