April home values reached similar levels from nearly nine years ago, according to the latest Zillow real estate market report.
On a monthly basis, home prices increased 0.5% from March with the Zillow Home Value Index now at $158,300. Furthermore, annual home value appreciation exceeded 5% for the sixth straight month, as prices rose 5.2% year-over-year. The
Out of the 365 metropolitans analyzed by Zillow in this report, 55% saw home values climb in April from March. Of the 30 biggest markets, Sacramento experienced the largest monthly increase, with home values rising 3.4%. Other areas that experienced an uptick in home prices during this time period include Las Vegas (3%) and San Francisco (2.8%).
Meanwhile, over the last year, 29 major markets had a surge in home values, with more than half up by double-digit percentages. Phoenix had the largest increase in home prices, up 25.5%, followed by Sacramento (25.4%), San Francisco (24.8%) and Las Vegas (23%). The only major city tracked by Zillow where home values declined year-over-year was Chicago.
However,
“In the short term, this has been welcome news for homeowners. But in the long term, this cannot be sustained, and consumers entering the market today should not expect this kind of appreciation to last," said Stan Humphries, chief economist for Zillow.
For example, starting in April 2013, Zillow is predicting for only a 4% rise in home values for the next 12 months to approximately $164,648. This represents a decrease from 5.2% annual rate of appreciation recorded between April 2012 and the present time.
"Overall, we expect home value appreciation to moderate as more supply comes on line over the next year, but in some areas, runaway home value appreciation, combined with expected interest rate hikes in coming years, runs a real risk of pricing out many potential buyers,” Humphries added. “Home values in these areas will have to flatten or even fall to come back in line."
