Home values rose 5.9 percent in 2012 according to the fourth quarter Zillow Home Value Index.
Compare this to the median sales price increase here in the Napa Valley for December 2011 to 2012 which rose 7.22 percent and the year over year increase for 2011 to 2012 was 7.23 percent. It will be interesting to see if things slow here as Zillow predicts but if the inventory of homes for sale remains as low as it, a historic low, then I feel all bets as to what will happen to this overheating market are off.
Zillow forecasts home values will continue improving expecting a 3.3 percent increase in 2013, a yearly appreciation rate more in line with historic norms. The high growth rate of 2012 is likely unsustainable.
The company reported “The 5.9 percent annual appreciation rate far exceeded yearly rates of appreciation typically associated with healthy markets and represents the largest annual gain since August, 2006 – near the peak of the housing bubble.”
Zillow Chief Economist Dr. Stan Humphries said “We expected 2012 to be a good year for housing, and it delivered in spades. Strong demand paired with limited inventory in many markets helped fuel a robust and often rapid recovery in overall home values, good news for homeowners after years of poor performance. We expect this recovery to continue into 2013, but at a more sustainable pace.”
He added “It’s important to be cautious moving forward, even as we celebrate the undeniably positive end to 2012, and be careful that consumers don’t grow to expect such high appreciation as the norm. Buying a home should be a long-term decision, and these swings between a deep housing recession and higher-than-normal appreciation rates can give consumers whiplash and cause some to lose sight of that.”
Of the 30 largest metros covered by this report, only Cincinnati and Chicago failed to show annual and quarterly increases in the fourth quarter. The housing market recovery continues to be uneven ranging from a 0.2 depreciation in Chicago to a 22.5 percent appreciation in Phoenix for all of 2012.
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