3 More Years for Home Values to Recover
Nationally, home values remain 11.3 percent below their 2007 peak, according to Zillow, Inc., which operates the largest home-related marketplaces. Looking ahead, U.S. home values are expected to rise another 4.2 percent through the second quarter of 2015, according to the Zillow Home Value Forecast. It will take 2.7 years for national home values to re-achieve their pre-recession levels, assuming a steady rate of appreciation at the forecasted level.
Locally, in 50 of the nation’s 100 largest metro markets, it will take three years or more for home values to reach prior peaks. Notable large metros where full recovery in home values will take longer than a decade include Minneapolis (14.5 years), Kansas City (12.5 years) and Chicago (11.7 years).
“In dozens of markets, homeowners that bought at the peak of the market in 2006 or 2007 will have to wait until 2017 or later to get back to the breakeven point on their home, a lost decade in which they will have built up no home equity. This is reflected in stubbornly high negative equity and effective negative equity rates, with more than a third of Americans with a mortgage lacking enough equity to realistically list their home for sale and buy another,” said Zillow Chief Economist Dr. Stan Humphries. “But there is a silver lining as we navigate these tricky middle innings of the recovery. Because home values remain so far below their peak levels in so many areas, it is still possible for buyers to find bargains. This will be critical to maintaining home affordability over the coming years, especially as mortgage interest rates rise.”
U.S. home values climbed 6.3 percent year-over-year in the second quarter to a Zillow Home Value Index (ZHVI) of $174,200, the slowest annual pace of appreciation recorded so far this year and a sign that the market is returning to more normal levels. In a more normal market, home values appreciate at roughly 3 percent per year. Home values nationwide were up 1 percent compared to the first quarter and 0.5 percent from May.
Nationally, rents rose 2.5 percent year-over-year in the second quarter, to a Zillow Rent Index of $1,310, but fell 0.3 percent compared to the first quarter. The quarterly decline was the largest recorded since Zillow first began publishing the Zillow Rent Index in late 2010. U.S. rents were flat month-over-month.
For more information, visit http://www.zillow.com/research/
American Apartment Owners Association offers discounts on products and services for all your property management needs. Find out more at www.joinaaoa.org.
Accessibility