SAN DIEGO-A recent report from San Diego-based DataQuick shows that Home prices continued to trend upward in May as growth spread to more areas of the country. And according to the firm’s Property Intelligence Report, there was an especially strong housing performance in areas such as Denver and Salt Lake City recently.
Denver saw year-over-year home prices increase 13.6% in May, while Salt Lake City enjoyed a 6.4% increase. Over the same period, foreclosures were down 47.8% in Denver and down 60% in Salt Lake City.
“Year-over-year sales have been steady in these areas, but home sales have surged in these markets over the past few months,” says Gordon Crawford, vice president of analytics for DataQuick. “Steady employment growth is supporting the robust housing performance in both Denver and Salt Lake City as their central geographic location has allowed each market to diversify their economies and attract new businesses in industries such as defense, tourism and technology.”
Though overall home price growth has been steady of late, Crawford cautions that factors such as unsteady job creation, domestic fiscal issues and low levels of construction could affect growth going forward. Crawford adds, “The year has started strong, but moderate underlying home price drivers will eventually contribute to reductions in demand for housing and tempered growth; although the timing of such a decline is very uncertain.”
According to a Zillow Home Value Index, national home values rose again in May, climbing 0.5% from April. According to the company’s recent report, home values were up 5.4% year-over-year in May, the second-highest annual rate of national appreciation registered in the past 12 months.
The 5.4% annual gain in May was exceeded in the past year only by January’s 5.6% year-over-year increase. Home values have risen or remained flat month-over-month for 19 straight months, says a report. The last time home values rose to approximately this level was July 2004.
Roughly 50.8% of the 360 metros covered experienced home value appreciation between April and May. Among the 30 largest metro areas covered by Zillow, Sacramento experienced the largest monthly increase. Other large metro areas with notable monthly increases include Las Vegas and Los Angeles, says the firm.
For the 12-month period from May 2013 to May 2014, US home values are expected to rise 4.1%, according to the Zillow Home Value Forecast. The pace of home value appreciation nationwide and in many local markets is expected to moderate as more sellers enter the market and builders begin construction on more new homes, helping ease the supply crunch that has so far contributed heavily to rapid home value appreciation.
“Enjoy it while it lasts, because the housing market will undoubtedly look very different a few years down the road from how it appears now,” says Zillow Chief Economist Dr. Stan Humphries. “Inventory constraints are beginning to ease in many areas as more listings and new homes come on line, which will ultimately help end this period of rapid annual home value appreciation above 5%. Additionally, as interest rates begin to rise from their historic lows, some demand may also ebb from the market as home purchases become more expensive to finance.”
He adds that “While we believe the housing recovery will remain strong, home value appreciation will slow down, and buyers in it for the short term could get burned if they assume home values will continue rising as they have unabated. A home should always be looked at as a longer-term purchase, which will help cushion homeowners against volatile short-term swings in value.”