2014 a Year of Recovery for Owners of Low-End Homes
Many homeowners in the bottom third of their markets are finally in a position to sell, just in time for millennials to enter the housing market in greater numbers in 2015
-Homes in the bottom third of home values bottomed out in January 2012 with a median value of $84,100. In December 2014, they had bounced back to a median value of $101,400.
-U.S. home values overall rose to a fourth quarter Zillow® Home Value Indexi of $179,200.
-For-sale inventoryii is returning for all homes, up 12.2 percent from December 2013. The previous year, from December 2012 to December 2013, inventory rose just 2.8 percent.
-Home values grew 6.6 percent in 2014. In 2015, they are forecasted at half that rate -- 3 percent.
SEATTLE, Jan. 23, 2015 /PRNewswire/ -- Owners of the country's lowest valued homes emerged from 2014 in a stronger position than previous years, with home values up 6.8 percent year-over-year.
Lower-valued homes were hit harder by the housing recession than luxury and high-end homes, and had a less-steady recovery. But 2014 saw a solid comeback for those homeowners whose home values are in the bottom third of their markets, according to the fourth quarter Zillow Real Estate Market Reportsiii.
While homeowners in the bottom price tier are still 17 percent shy of their pre-recession peak values, this is a distinct improvement from the 31 percent value loss they suffered when home values hit rock bottom in January 2012.
Returning value means many with lower-valued homes who had been in negative equity are now able to sell or refinance, boosting low-end inventory, which has been tight for the past few years.
Going into the home-buying season in 2015, homebuyers can expect to find more homes on the market and less competition from all-cash bidders. Metros with the biggest jump over last year in low-end inventory are Las Vegas, with 66.9 percent more low-end homes on the market in December 2014 than December 2013, Riverside, with 47.3 percent more and Washington, D.C. with 45.7 percent more.
Homeowners of lower-valued homes are emerging from negative equity and are able to sell just as many in the millennial generation prepare to buy homes, pushed into the housing market by rising rents and abysmal rental affordability. Zillow expects millennials to overtake Generation X as the top home-buying generation in 2015.
"In many ways, for the housing market to fully normalize, it has to start at the bottom," said Zillow Chief Economist Dr. Stan Humphries. "More lower-end home sellers will help meet demand from entry-level buyers, and these sellers in turn will re-enter the market in search of a slightly pricier home, which will entice more middle- and upper-tier sellers to list their homes. As the economy gets stronger, we expect more young adults to strike out on their own, moving out of friends' and parents' homes. This will create strong demand in coming months, especially for less expensive homes."
Rents continued to rise, and at the end of December the Zillow Rent Indexiv had increased 3.3 percent year-over-year, to $1,345.
| Metropolitan Area |
Q4 2014 ZHVI |
Q4 2014 YoY % Change |
Q4 2014 YoY % Change For Low-Tier Homes |
Q4 2015 Forecasted % Change |
YoY % Change in Inventory |
| United States |
$ 179,200 |
6.6% |
6.8% |
3.0% |
12.2% |
| New York/ Northern New Jersey |
$ 385,400 |
5.2% |
6.3% |
1.6% |
16.8% |
| Los Angeles, CA |
$ 532,900 |
5.8% |
10.2% |
3.0% |
16.1% |
| Chicago, IL |
$ 189,500 |
5.8% |
3.7% |
2.5% |
16.0% |
| Dallas-Fort Worth, TX |
$ 152,600 |
8.2% |
8.9% |
4.4% |
-9.5% |
| Philadelphia, PA |
$ 204,300 |
5.0% |
5.3% |
2.5% |
4.5% |
| Houston, TX |
$ 152,600 |
12.3% |
17.5% |
2.1% |
-9.2% |
| Washington, DC |
$ 366,000 |
5.3% |
10.4% |
0.7% |
31.5% |
| Miami-Fort Lauderdale, FL |
$ 211,900 |
14.7% |
19.6% |
2.5% |
23.7% |
| Atlanta, GA |
$ 155,000 |
12.2% |
20.3% |
5.2% |
16.6% |
| Boston, MA |
$ 370,000 |
5.4% |
7.9% |
0.3% |
11.7% |
| San Francisco, CA |
$ 706,600 |
8.3% |
16.3% |
2.9% |
1.3% |
| Detroit, MI |
$ 115,700 |
9.8% |
5.8% |
3.5% |
16.0% |
| Riverside, CA |
$ 283,800 |
10.2% |
14.3% |
7.6% |
36.0% |
| Phoenix, AZ |
$ 199,500 |
2.9% |
4.0% |
2.8% |
5.3% |
| Seattle, WA |
$ 341,200 |
7.3% |
9.9% |
5.0% |
7.3% |
| Minneapolis-St Paul, MN |
$ 214,900 |
7.6% |
6.4% |
2.7% |
18.1% |
| San Diego, CA |
$ 469,400 |
4.5% |
8.4% |
2.6% |
29.7% |
| St. Louis, MO |
$ 130,600 |
2.4% |
0.0% |
2.0% |
5.2% |
| Tampa, FL |
$ 148,600 |
10.5% |
9.7% |
3.2% |
9.2% |
| Baltimore, MD |
$ 244,000 |
2.7% |
3.1% |
1.3% |
24.1% |
| Denver, CO |
$ 282,100 |
13.5% |
17.1% |
3.8% |
-25.3% |
| Pittsburgh, PA |
$ 125,500 |
5.6% |
1.4% |
3.3% |
1.9% |
| Portland, OR |
$ 279,800 |
6.4% |
11.0% |
3.9% |
3.7% |
| Sacramento, CA |
$ 332,100 |
7.3% |
12.2% |
5.7% |
32.2% |
| San Antonio, TX |
$ 144,800 |
5.5% |
6.4% |
2.9% |
2.2% |
| Orlando, FL |
$ 170,600 |
11.1% |
14.1% |
5.0% |
33.9% |
| Cincinnati, OH |
$ 138,600 |
6.0% |
2.3% |
2.6% |
2.1% |
| Cleveland, OH |
$ 121,500 |
3.6% |
1.5% |
1.6% |
4.8% |
| Kansas City, MO |
$ 138,000 |
5.7% |
6.0% |
2.4% |
-2.2% |
| Las Vegas, NV |
$ 185,600 |
10.9% |
13.8% |
6.1% |
29.1% |
| San Jose, CA |
$ 837,900 |
10.4% |
13.4% |
4.8% |
-2.8% |
| Columbus, OH |
$ 145,600 |
5.4% |
2.8% |
2.4% |
-13.8% |
| Charlotte, NC |
$ 158,100 |
5.9% |
3.4% |
2.0% |
-10.7% |
| Indianapolis, IN |
$ 128,100 |
-1.0% |
11.3% |
2.9% |
4.2% |
| Austin, TX |
$ 221,000 |
11.1% |
N/A |
2.9% |
7.6% |
About Zillow:
Zillow, Inc. (NASDAQ: Z) operates the largest home-related marketplaces on mobile and the Web, with a complementary portfolio of brands and products that help people find vital information about homes, and connect with the best local professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Stan Humphries. Dr. Humphries and his team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. The Zillow, Inc. portfolio includes Zillow.com®, Zillow Mobile, Zillow Mortgages, Zillow Rentals, Zillow Digs®, Postlets®, Diverse Solutions®, Mortech®, HotPads®, StreetEasy® and Retsly™. The company is headquartered in Seattle.
Zillow.com, Zillow, Zestimate, Postlets, Mortech, Diverse Solutions, StreetEasy, HotPads, and Digs are registered trademarks of Zillow, Inc. Retsly is a trademark of Zillow, Inc.
_______________________________
i The Zillow Home Value Index is the median estimated home value for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars, and seasonally adjusted.
ii Each week, a count of the number of single-family, condominium and cooperative housing units listed for sale on Zillow is taken. The median of these values within a month is calculated as the monthly value. Because inventory can be seasonal, a seasonally adjusted value is reported using a standard STL procedure. This seasonally adjusted series is then smoothed using a three-month rolling average. More information is available at www.zillow.com/research.
iii The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research/. The data in Zillow's Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder's office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/local-info/ and www.zillow.com/research/data.
iv The Zillow Rent Index is the median Rent Zestimate® (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow's database, regardless of whether they are currently listed for rent. It is expressed in dollars.
SOURCE Zillow, Inc.
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