Home Values Rise Big in 2012
The U.S. housing market has seen the largest annual gain in home values since the peak of the housing bubble in 2006. Twenty twelve was a big year with a 5.9 percent rise in home values over 2011 according to Zillow’s Home Value Index (HVI). This gain is a huge feat given the roller coaster of the housing market the past few years.
Zillow released a statement noting that 2012’s appreciation rate “far exceeded yearly rates of appreciation typically associated with healthy markets, which can expect annual home value appreciation of roughly 3% on average.”
The fourth quarter of 2012 saw home values rise to an average of $157,400, which is up 2.5% over the third quarter. Of the 366 total metros analyzed in Zillow’s HVI, 69% registered annual home value gains in 2012 while 76% experienced quarter-over-quarter appreciation. Seven of the top 30 largest metros posted home value appreciation of 10% or higher, while only two metros, Cincinnati and Chicago, failed to report annual and quarterly increases.
Economist Says “Be Cautious Moving Forward”
The trend is widespread across the nation—people are eager to buy while others are reluctant to sell. Zillow chief economist Dr. Stan Humphries notes, “Strong demand paired with limited inventory in many markets helped fuel a robust and often rapid recovery in overall home values.” He urges consumers to be cautious moving forward despite the big win for the housing market in 2012. Swings in the housing market can cause great distress to potential homebuyers looking to make the long-term decision of homeownership.
To top it off, foreclosure activity declined in Q4 of 2012, with 5.22 out of every 10,000 homes nationwide facing foreclosure. Rents also fell 0.6% from the third to the fourth quarter, although rents were up 4.2 percent year-over-year in 2012 standing at an average of $1,274 in December.
The many submarkets within the booming Silicon Valley real estate market echo the trends of the rest of the country: “Inventory remains scarce, which drives up prices,” says SCCAOR president Barbara Lymberis. Once more sellers feel more confident in the market, Lymberis says, the market should begin to normalize. The average price for a single-family home in Silicon Valley was $883,185 in November. Take a look at Silicon Valley resources necessary if you are looking to buy or sell your home.
Twenty thirteen should begin to see a more historic norm for home value appreciation at roughly 3.3 percent. Maybe this will give sellers the confidence they need to re-enter the real estate market? What do you think?