By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.
The housing market kicked off 2013 with an energetic bang, with January marking the 15th consecutive month of home value gains and a positive report from Fannie Mae last week that noted housing is “on a sustained growth path,” despite a potential damper on overall economic growth at the federal level.
Home values were up 0.7% in January from the previous month, and up 6.2% year-over-year, according to the latest report from Zillow. It was the largest annual gain since July 2006, when home values rose 7.5% year-over-year.
Zillow’s home value index averaged $158,100 in January. The last time home values were this high at the national level was June 2004.
The rise in values is spreading out as well. Major markets that saw the biggest annual increase in home values were Phoenix (21.9%), San Francisco (17.2%), San Jose (16.8%), Las Vegas (16.2%), and Sacramento (13.7%).
And thanks to rising home values, Zillow estimates that 2 million homeowners are no longer underwater.
In a separate report released last week, Fannie Mae made some predictions for housing this year and gave an overall conclusion that this growth will keep up.
Fannie Mae economists predict the median price of an existing home will rise 2.3% in 2013, to $181,000. They expect the median price of a new home to increase 1.6% to $248,000. And they predict a further increase of 2.8% for both types of housing in 2014.
Growth, not recovery.
Of course, not every market will be enjoying this growth – many are still in recovery mode. But Fannie Mae expects existing home sales, new home sales and single-family housing starts to see substantial increases from 2012. The mortgage financier predicts existing home sales will rise 11.5%, new home sales will climb 12.5%, and single-family housing starts will shoot up 23.7% this year from 2012.
The substantial increase in housing starts is telling of the activity expected in the market for new homes this year and in coming years. We’ve talked here before about how investors are betting bigger on home builders this year, with the first builder IPOs debuting this year in nearly 10 years. We know the demand is there in many markets that suffer from lack of supply – so this is great news to see housing starts increasing.
As anticipated, 2013 is showing signs of breaking out of a recovery pattern and growing faster and with more force. Hold on tight – the ride is getting intense!