National home values rose by 1.1% in October from September, the largest monthly gain in seven years, according to a report released Wednesday by Zillow, the online real-estate information company.
It’s the first time housing markets have posted 12 straight monthly gains in the Zillow survey since the housing sector’s long slide began in 2006. “We’ve reached a milestone,” said Stan Humphries, Zillow’s chief economist.
All of the 30 largest metro areas tracked by Zillow posted gains in October from September except for Chicago.
Nationally, home values were up by 4.7% from one year ago, with some 26 of 30 markets seeing rising values, led by Phoenix’s gain of 22.3%, San Jose, Calif. (11.4%), Denver (10.4%), San Francisco (9.5%) and Miami (8.8%). The only cities with year-over-year declines included Atlanta (-2.4%), Chicago (-2.1%), New York (-1.2%) and Philadelphia (-0.9%).
Home values have lifted off of their depressed levels of one year ago for a variety of reasons. Homes are more affordable, particularly after considering how far mortgage rates have fallen, though affordability has been high for a couple of years now. Job growth, while modest, has stayed positive.
Of course, those conditions were present through much of 2011, when the housing market was still in a major funk.
So what’s changed this year?
Inventories have plunged to their lowest levels in a decade, despite the much-ballyhooed “shadow” inventory of potential foreclosures, as investors moved in to buy up homes for a steal.
And there have been more buyers chasing fewer homes, as rising rents, increased household formation, and improving consumer confidence have kicked demand into higher gear.
At the beginning of the year, Mr. Humphries’ forecast called for a modest decline home prices for 2012. Now, he says, “the bottom line is that homes are more affordable than at any time in recent memory, and buyers are seizing this opportunity.”
Mr. Humphries says he expects demand to pick up even more next year.
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