Zillow Forecasts 4.1% Rise in Home Values by Next May

Home values continued trending upwards across the nation in May, according to Zillow’s most recent Real Estate Market Report, rising 5.4% on a year-over-year basis.

National home values rose 0.5% from April to May to $159,000, matching June 2004 levels.

Between May 2013 and May 2014, Zillow’s Home Value Forecast predicts a 4.1% appreciation across the nation to $165,448.

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Looking at the 30 largest metro areas covered by Zillow, 29 experienced year-over-year home value increases in May, with St. Louis as the only exception. Half were up by double-digits, with the most growth seen on a yearly basis in Las Vegas (up 28%), Sacramento, Calif. (up 26.1%) and San Francisco (up 24.2%).

More than half (51%) of the 360 markets Zillow covers showed monthly home value appreciation in MAy 2013, while 72% saw annual appreciation.

National home values are still down 18.3% from their peak in May 2007, but are up 7.2% from the post-recession trough in October 2011.

Home value appreciation is expected to slow down, even though economist believe the housing recovery will stay strong.

“Enjoy it while it lasts, because the housing market will undoubtedly look very different a few years down the road from how it appears now. Inventory constraints are beginning to ease in many areas as more listings and new homes come on line, which will ultimately help end this period of rapid annual home value appreciation above 5 percent,” said Zillow Chief Economist Dr. Stan Humphries. “Additionally, as interest rates begin to rise from their historic lows, some demand may also ebb from the market as home purchases become more expensive to finance.”

Written by Alyssa Gerace

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  • With the average value of the Zillow average home values stuck in the last decade (just when home values in many areas were just taking off), is it any wonder why the HECM portion of the net position of the MMI Fund is negative? All of those HECMs were endorsed after September 30, 2008, about half of which are fixed rate Standards.

    The words of Dr. Humphries are somewhat disturbing. If he is right, many of the HECMs with anticipated losses will terminate before substantial home value appreciation will take place making many of those losses not just recognized but more importantly realized.

  • I think Zillow is getting a little too big for their britches in this assumption. I say that only because they seem to be so inconsistent in their valuations on the homes that I’ve run across. The appraisers certainly aren’t being swayed by any of this prognostication.

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