Zillow: Home Prices Continue to Climb

Do we indeed have a little housing recovery in the making?  This would certainly bolster the no recession calls, but I am not getting overly optimistic.  I still think we’re in for no recession, but I don’t think we’re headed back to the boom days in housing any time soon.  Instead, the more likely scenario will involve the usual post-bubble stagnation for many years to come.  That doesn’t mean there can’t be rallies and declines in the meantime.  And according to Zillow’s latest housing report we’re seeing a bit of a rally:

“Zillow’s July Real Estate Market Reports, released today, show that home values increased 0.5 percent to $151,600 from June to July (Figure 1), marking another month of healthy monthly appreciation. Compared to July 2011, home values are up by 1.2 percent (Figure 2), supported in many places by low for-sale inventory. Inventory shortages are being fueled by negative equity and a slowed distribution of REOs. According to Zillow’s first quarter Negative Equity Report, 31.4 percent of homeowners with a mortgage are underwater. A more in-depth analysis of the impact of negative equity on inventory shortages can be found here. In conjunction with rising home values, rents continued to rise in July, appreciating by 0.2 percent from June to July. On an annual basis, rents across the nation are up by 5.4 percent (Figure 3).”


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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • http://www.conventionalwisdumb.com Conventional Wisdumb


    Just curious, don’t these issues about the construction of the index make it questionable especially for the prior historical period (I thought Zillow was founded in 2005 so not sure how you get 1998 data anyway)?

    Q. What is the Zillow Home Value Index and how is it calculated?

    A. The Zillow Home Value Index is the median value of all homes in a geographic area. It is a valuation index calculated as the median value (Zestimate) of all homes in a particular geographic area. At the national level, this data is then weighted according to population in each area.

    Q. Are foreclosures included in the Zillow Home Value Index?

    A. No, foreclosures (when a homeowner loses their home to a lender) are excluded. We also exclude the sales of REOs (real estate owned by banks). These homes, with the bank as the seller, often sell for a lower price than a typical home.

    Q. Why don’t you include foreclosures in the Zillow Home Value Index?

    A. Our data is meant to give a general indication of the value of their home were they to sell it on the open market, not have it foreclosed upon. If we combined both foreclosures and non-foreclosures into a single metric, we don’t believe we’d provide good insight into either market.

    In many areas today, if you include foreclosures in a single metric, you’re underestimating the decline in value of foreclosed homes and overestimating the decline in value of non-foreclosure homes.

    However, since foreclosures exert downward pressure on the prices of non-foreclosure homes nearby, and those sales prices are included when we factor our Zestimates, the influence of foreclosures can be seen in our data.

  • Aar Bee

    This chart shows a clear a-b-c corrective second wave pattern in this rally in house prices. Next leg down could be a severe down turn in the form of a third wave down.

  • http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/ REN

    Wasn’t the point of QE2 and other mechanisms to keep interest rates low. This allowed refinancing so the debt overhead could be better managed. Also, inflating the money supply pushes housing prices up (even in BSR/deflation – bubble implosion would have dropped prices further without the capital infusion). This allows the private banking masters to reflate their underlying assets, thus protecting themselves from their 20 year drunken party.

    It would have been better to take the banks into recievership, and restructure the banks and loans. The guilty parties should have paid, rather than socializing the risks.