More about home prices

Jan. 22, 2013, 12:02 a.m. EST

Home prices up ‘unsustainable’ 5.9% in 2012

Real-estate data provider projects home values to rise 3.3% this year

 

By Kate Gibson, MarketWatch

Reuters

A home in New York is put up for sale. Zillow projects home values will rise 3.3% this year.

NEW YORK (MarketWatch) — The value of American homes climbed 5.9% in 2012, the largest annual gain since the summer of 2006, or near the peak of the housing bubble, according to data released Tuesday by real-estate information provider Zillow Inc.

The final three months of 2012 marked five consecutive quarters of U.S. home value appreciation, and the near 6% annual jump is roughly double the historical average that has home values climbing about 3% a year, Zillow (NASDAQ:Z) said.
“Good news for homeowners after years of poor performance,” Stan Humphries, Zillow’s chief economist, said in a statement. But Humphries cautioned consumers against expecting 2012-like gains in the future, saying we expect this recovery to continue into 2013, but at a more sustainable pace.”

Click to Play

Are investors right to be optimistic?

Global equity markets are soaring and investor appetite for risk appears to have finally recovered. But, says Wall Street Journal's Simon Nixon, this might have more to do with an excess of market liquidity rather than any real return of positive sentiment.

In 2013, the company forecasts U.S. home values rising 3.3%, or more in line with historical norms.
Strong demand coupled with limited inventory bolstered home prices in many markets, with 254, or 69%, of the 366 metro areas analyzed showing home-value gains last year.
Just Cincinnati and Chicago failed to show annual and quarterly increases in the final three months of 2012.
As home values climbed in the fourth quarter, foreclosure activity lessened, with 5.22 of every 10,000 homes nationwide facing foreclosure in December, down 2.2 homes per 10,000 year-over-year and down 1.2 homes from the prior quarter, Zillow said.
Foreclosure resales represented 12% of the market in 2012’s final quarter, down 4% from the end of 2011 and down 0.3% from the third quarter.
National rents fell 0.6% in the fourth quarter from the third, but ended 2012 up 4.2% year-over-year.