Home / News / Market Studies / Home Value Appreciation Set to Ease Over the Next Year
Print This Post Print This Post

Home Value Appreciation Set to Ease Over the Next Year

The recent fast-paced home price appreciation across the country led some markets to the brink of a bubble, but deceleration over the summer months has ""Zillow"":http://www.zillow.com/ analysts breathing a sigh of relief as the bubble threat deflates.


Home value appreciation has declined steadily for three months, according to Zillow, and half of the nation's 20 largest metros experienced negative appreciation in September.

""Far from being a negative sign, we're relieved to see more noticeable signs of cooling in the market,"" said Stan Humphries, chief economist for Zillow.

""If home values continued to rise as they have, relatively unchecked, we would almost certainly be headed into another bubble cycle, and nobody wants that,"" Humphries said.

At 1.2 percent, home value appreciation in the third quarter was about half that of the second quarter, according to the U.S. Zillow Home Value Index.

Year-over-year, home values appreciated 6.4 percent, according to Zillow.

Zillow's Home Value Index is now $163,000.


While some markets continue to struggle, a few California markets--despite having escaped the worst of the housing crisis--have experienced fast-paced price gains over the past year.

Rising prices threatened affordability in these markets as income growth lagged behind.

San Diego, California; Los Angeles, California; and San Francisco, California--all having posted monthly price gains around 3 percent a few months ago--experienced price depreciation at the end of the third quarter.

Zillow detected monthly declines of -1.2 percent in San Diego, -1.1 percent in Los Angeles, and -0.1 percent in San Francisco.

""This is more proof that the market recovery is entering a new phase, transitioning away from the bounce off the bottom we've been experiencing and finding a more sustainable level,"" Humphries said.

""This moderation should help consumers feel more at ease in their decisions to buy and sell, and will help keep the market balanced,"" he added.

While half of the 30 largest metros experienced price declines over the month, none experienced price declines over the year in September, according to Zillow.

Zillow expects annual home price appreciation to continue to ease over the next year, reaching about 3.8 percent by September of next year.

The three metros with the greatest annual home price appreciation in September were all located in California--Sacramento, California (34.1 percent), Las Vegas, California (33.3 percent), and Riverside, California (31.8 percent).

Rents rose 1.3 percent in the third quarter and 2 percent over the year in September, according to Zillow.


Check Also

REO Professionals Set to Gather in Vegas

Five Star’s inaugural REO Connect event will serve as a hub for industry professionals committed to making the REO process profitable, efficient, and effective at eliminating blight from neighborhoods nationwide.