Home values in the U.S. were up 5.9% in 2012 and have appreciated for four consecutive quarters, according to a report from Zillow (Z).
It was the largest annual gain since August 2006. Zillow said its research indicates that housing markets historically see annual home value appreciation of roughly 3% on average. The company’s Home Value Forecast is projected an increase of 3.3% in 2013, more in line with historic norms.
“We expected 2012 to be a good year for housing, and it delivered in spades. Strong demand paired with limited inventory in many markets helped fuel a robust and often rapid recovery in overall home values, good news for homeowners after years of poor performance. We expect this recovery to continue into 2013, but at a more sustainable pace,” Zillow chief economist Dr. Stan Humphries said in a statement.
The average home value rose to $157,400 in the fourth quarter, a 2.5% increase over the previous quarter. Growth in home values was widespread in 2012. Zillow said out of the 30 largest metro markets it covers in the report, only Cincinnati and Chicago did not show annual and quarterly increases in the fourth quarter. Of the 366 total areas analyzed, 69% registered annual gains.
Foreclosure activity slowed in the final quarter, declining 2.2 year-over-year to 5.22 homes per 10,000. Foreclosure re-sales accounted for 12% of the market, down 4% from the end of 2011.
National rents fell 0.6% from the third to fourth quarter, but closed out the year up 4.2% over 2011.
“It's important to be cautious moving forward, even as we celebrate the undeniably positive end to 2012, and be careful that consumers don't grow to expect such high appreciation as the norm. Buying a home should be a long-term decision, and these swings between a deep housing recession and higher-than-normal appreciation rates can give consumers whiplash and cause some to lose sight of that,” Humphries added.