The November Zillow Real Estate Market Report says nationally, for-sale inventory was up 11.8 percent annually, but fell 1.7 percent month-over-month. In general, national for-sale inventory remains below peak levels, though they have been higher in 2014 compared with 2013.
According to the report, inventory rose on an annual basis in 464 of 641 metro areas. But, inventory has drifted downwards on a monthly basis for the last two months. Of the largest 35 metro areas covered by Zillow, 25 of 35 saw annual gains in for-sale inventory, while 30 of 35 saw monthly declines. In 20 of the 35 metro areas, inventory rose annually and fell on a monthly basis.
The metro areas seeing the largest annual change in inventory were Riverside, Calif. (42.6 percent); Orlando, Fla. (40.2 percent); Sacramento, Calif. (37.4 percent); Washington (35.4 percent) and San Diego (33.2 percent). Areas with the largest monthly declines in inventory were San Jose, Calif. (down 11.8 percent); Denver (down 9.8 percent), San Francisco (down 7.9 percent) and Seattle (down 5.5 percent).
U.S. home values also showed an increase. They rose 6 percent year-over-year in November, the smallest annual gain since June 2013, and 0.3 percent from October.
The aggregate value of all homes nationwide is expected to be approximately $27.5 trillion by year’s end, up more than $1.7 trillion (6.7 percent) year-over-year, and the third consecutive annual increase. According to the report, it is a testament to just how huge and important the housing sector is to the overall economy that gains of more than a trillion dollars in one year represents only single-digit percentages of the total market. Still, as massive as the current overall value of housing is in the U.S., the aggregate value of all homes remains 6.1 percent below the Q3 2006 peak of almost $29.3 trillion. This makes sense, as the median home value nationwide still is down almost 10 percent from its pre-recession high.
But just as median home values in several local markets across the country – including Denver, Pittsburgh and a handful of Texas metros – have exceeded their prior peaks, so too have aggregate home values in a few large markets. In nine of 35 largest metro areas covered by Zillow, the total value of all homes in the area is at or above prior peak. Many of the same areas where median home values are above peak are also the same as where aggregate values are at peak, including Denver and a collection of Texas markets (Dallas, Houston and Austin).
Although home values to continue to grow, they are rising much more slowly than earlier in the year, currently at a pace last seen in mid-2013. Over the next 12 months, from November 2014 to November 2015, home values are predicted to rise 2.4 percent to slightly less than $182,000.
Overall, national home values remain 9.6 percent below the market’s April 2007 peak. Areas with the largest annual gains in home values in November included Miami (13.6 percent), Atlanta (12.8 percent), Houston (11.9 percent), Orlando, Fla. (11.9 percent) and Las Vegas (11.5 percent).
The rate of foreclosures decline in November, with 4.2 out of every 10,000 homes in the country being liquidated. This number is down from 5.2 one year ago. Nationally, foreclosure re-sales rose slightly, making up 8 percent of all sales in November, compared with 7.6 percent in October and 7.4 percent in November 2013. Zillow expects the percentage of foreclosure re-sales to continue to increase slightly throughout the winter months, mainly because of overall seasonal declines in inventory.
Outlook
Zillow says the housing market continues to recover and home values are predicted to continue to rise, but at a slower pace. Its forecast calls for another 2.4 percent appreciation from November 2014 to November 2015 for the nation, less than half the appreciation rate seen between November 2013 and November 2014.
The report states that this slower pace will help bring more balance to the market, as more previously sidelined sellers decide to list their homes, and more buyers enter the market – particularly younger buyers. These buyers will find themselves with more leverage in the market, after years in which sellers largely held the upper hand in negotiations.
Out of the 35 largest metro areas covered by Zillow, the company expects to see home values rise the most in Riverside, Calif. (6.2 percent); Las Vegas (5.9 percent), Dallas (5.1 percent) and Seattle (5 percent). Both Las Vegas and Riverside, Calif., are still more than 30 percent down from peak home values, and have lots of room for home values to grow. Dallas is currently the most expensive it ever has been (nominally), while Seattle home values are down 11 percent from their August 2007 peak.