Home Values Rise for the first time in Five Years.
A CNN article today expressed optimism in the in the increasing success of the home market across the country. Although some major metropolitan areas are still stricken with declining values, nationwide home values rose 0.2% year-over-year to a median $149,300 during the second quarter of this year. This is the first annual increase since 2007, real estate listing site Zillow reported that prices were up 2.1% from the first quarter. Even though June marked the fourth consecutive month of value increase, over all they are still down 24% from April 2007, when Zillow started tracking them. "It seems clear that the country has hit a bottom in home values," said Zillow's chief economist Stan Humphries. "The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own." Because Zillow uses a different methodology in calculating home values without the inclusion of foreclosures and bank-owned properties the statistics present a more authentic picture of people who are willing to buy and sell. "Our index is geared to consumers, conventional sellers deciding whether they want to put their homes on the market," said Humphries. The indexes that include foreclosures in their market data show larger price declines. The peak-to-trough drop for the S&P/Case-Shiller home price index, for example, is about 34% compared with Zillow's 24%. Less than one third of the 167 metro areas Zillow surveyed recorded annual increases in home values, but the size of the price gains in these areas more than offset the losses posted by the remaining two-thirds of the markets. "Of course, there is still some risk as we look down the foreclosure pipeline and see foreclosure starts picking up," Humphries said.That would result in a greater supply of homes being offered for sale by the end of the year. But hopefully demand will rise to absorb that, particularly in markets where there are acute inventory shortages now. So, to sum up, there are reasons to be cheerful about the market but don’t get over excited. The worst may be over but we still have a long way to go.