By S.E. Slack
While some real estate markets are still increasing rapidly, such as San Jose and Las Vegas, others are slowing as colder weather advances. From September to October, national home values declined 0.1 percent according to real estate firm Zillow. No one should panic just yet, however, according to experts.
The October Zillow Real Estate Market Reports cover 388 real estate areas. Ten of 30 of the largest metro areas covered by the company showed monthly depreciation in October and two more were flat. The biggest declines were in St. Louis (-0.9 percent), Pittsburgh (-0.7 percent), Dallas (-0.7 percent) and Baltimore (-0.7 percent).
Home values in Ohio corresponded with the volatility of the nation. Cities showing improvements month-over-month included: Columbus (0.5 percent), Akron (0.4 percent), Toledo (0.7 percent) and Canton (0.8 percent). Cities with downward trends included: Cleveland (- 0.1 percent), Dayton (- 0.6 percent) and Youngstown (-0.8 percent).
Stan Humphries, chief economist for Zillow, said these numbers indicate that housing recovery has entered a new phase.
“We do believe that this is quite normal as the housing market recovers and returns to a more ‘normal’ state,” he said.
Zillow is forecasting another 2.7 percent in home value appreciation by October. That slow but steady appreciation is helping the national market return to sustainable levels.
Negative equity, however, remains high with 21 percent of mortgaged homeowners underwater in the third quarter of this year. That’s impacting affordability, says Humphries. As affordability decreases, current hot markets like San Jose, San Francisco and Los Angeles will become unreasonable for buyers as mortgage rates increase.
Humphries expects mortgage rates to pass the 5 percent mark later in 2014. Overall, national home values are still down 16.3 percent from their peak in May 2007. The housing market is improving but at slow rates.