Home values in most major real estate markets will stop falling this year, according to the Zillow Home Value Forecast. Values in 19 of the 30 metropolitan areas included in the analysis are expected to hit bottom by the end of 2012 – some already have, like Sarasota. Several of them that have been especially hard hit, included Phoenix and Miami-Fort Lauderdale, will see significant value increases by next April. The national average also may hit bottom by the end of 2012.
Rents have increased in 70% of the metro areas covered by Zillow over the past year. Bottom line: With average US home values now back around late-2003 levels – down about 25% since the peak in May 2007 – potential home buyers who have been reluctant to buy into a sinking market should take advantage of record low mortgage rates and start shopping.
Important: The housing recovery will be modest as the US slowly works off its excess supply of homes, including homes that went through foreclosures. Markets in states that have a slower, more convoluted foreclosure process will continue to lose ground. This includes Atlanta (predicted to lose 4.1% through March 2013) and Chicago (likely to lose 3.8%). But most other cities should see values rise between 1% – 3% annually through 2016 before resuming a more regular, long-term growth trend of 2.5% to 5% a year.
Markets where values are expected to reach their low point by the end of the year: Baltimore…Boston…Dallas-Fort Worth…Denver…Las Vegas…Los Angeles…Pittsburgh…Portland, Oregon…Riverside, California…Sand Diego…San Jose…St. Louis…Tampa…and Washington, DC.
Markets where values are not expected to bottom out yet: Atlanta…Charlotte…Chicago…Cleveland…Columbus, Ohio…Detroit…Minneapolis-St. Paul…Sacramento, California…San Francisco…Seattle…and Virginia Beach.