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Housing Value Appreciation Rate Slows in 1st Quarter
SEATTLE -- The national housing market showed signs of moderation in the first quarter after months of robust and largely unsustainable annual home value appreciation. Home values were up in the Cleveland and Columbus markets but dropped slightly in the Pittsburgh area.
The Zillow Home Value Index rose to $157,600 as of the end of the first quarter, up 5.1 % year-over-year and 0.5% from the fourth quarter of 2012, according to the Zillow Real Estate Market Report for March. This marks the 16th consecutive month of a rise in valuation and the second straight month of slowing annual appreciation.
In Cleveland, the average home value in March was $110,900, up 1% quarter over quarter and 2% year over year. In Columbus, the average value was $127,500, up 0.6% and 3.4%, respectively. In Pittsburgh, the $111,700 average value is down 0.2% and up 2.15%, respectively.
Historically, housing markets can expect annual home value appreciation of roughly 3%, according to Zillow research.
Looking ahead, the Zillow Home Value Forecast shows national home values increasing by 3.2% through March 2014, an annual appreciation rate more in line with historic norms. But in some local markets, home values continue to rise at a breakneck pace. Five metros covered by Zillow experienced year-over-year appreciation of more than 20%: Phoenix (up 24%), Las Vegas (up 22.3%), San Jose (up 22.1%), San Francisco (up 21.4%) and Sacramento (up 20.1%).
"The national housing market has rebounded strongly over the past year, but the sometimes dramatic home value run-ups experienced during these months were never expected to be sustainable, and recent slowdowns are indicative of a market that is slowly finding its natural level," said Dr. Stan Humphries, Zillow chief economist. "Looking forward, we expect annual home value appreciation to continue to slow, as more inventory comes up for sale. But pockets of very rapid appreciation will remain, a troubling sign of volatility and a potential future headache as affordability is compromised and homes begin to look much more expensive to average buyers. This affordability issue may become acute in many markets in a couple years once mortgage rates begin to return again to normal levels."
Further underscoring the unevenness of the recovery, seven of the top 30 metro markets covered by Zillow saw a decline in home values in the first quarter.
Foreclosure rates rose in the first quarter compared to the fourth quarter, likely because of a seasonal acceleration after the traditionally slow holiday period. A total of 5.11 out of every 10,000 homes were foreclosed upon in the first quarter, down 1.3 homes per 10,000 from the fourth quarter, and down 2.4 homes per 10,000 year over year.
Published by The Business Journal, Youngstown, Ohio.
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