Home Values Continue to Climb in April

Overview

Zillow’s April Real Estate Market Reports, released today, show that home values increased 0.7 percent to $147,300 from March to April (Figure 1). Compared to April 2011, home values are still down by 1.8 percent (Figure 2). This strong monthly appreciation follows March’s encouraging data point, which also had home values appreciating at a healthy clip. In conjunction with rising home values, rents also rose significantly in April, appreciating by 1.6 percent from March to April. On an annual basis, rents across the nation are up by 3.2 percent (Figure 3).

Home Values

The Zillow Real Estate Market Report covers 166 metropolitan areas (metros) of which 88 showed monthly home value appreciation. Among the top 30 metros, 18 experienced home value appreciation. The largest monthly decline among the top 30 metros took place in Atlanta, where home values fell by 0.7 percent from March to April. Leading the pack on the appreciation side are once again Miami-Fort Lauderdale and Phoenix, which experienced 1.6 percent and 1.9 percent home value appreciation, respectively. Overall, national home values are down 24 percent since their peak in May 2007.

Rents

The Zillow Rent Index (ZRI) shows year-over-year gains for nearly 78 percent of the metropolitan areas covered by the ZRI. The rental market remains strong, especially in markets that continue to experience consistent home value declines. For example, Chicago metro rents increased 7.4 percent over the past year.

Foreclosures

The rate of homes foreclosed continues to significantly decline in April with 6.8 out of every 10,000 homes in the country being liquidated. We had been expecting an increase in foreclosure liquidations after the multi-state attorneys general settlement in February, however we are not yet seeing evidence of this in the data. Nationally, foreclosure re-sales slowed a bit, making up 19.1 percent of all sales in April (Figure 4).

Price Tiers

Throughout the housing recession, the bottom tier of homes in terms of value has performed worse than the top tier (Figure 5). This trend has now been reversed. The bottom tier is appreciating at a higher monthly rate than the top tier. Figure 6 shows the spread between the top and bottom tiers and the reversal of fates in the recent months.

Outlook

As the ZIP code-by-ZIP code recovery takes hold, with many metropolitan areas already having hit bottom, the national housing bottom and eventual recovery are falling into place. We still expect a national bottom in home values later this year although there is substantial upside risk in this forecast given the bullish home value trends currently.