Need more evidence that the housing market may be rightsizing? Zillow Inc. said home values in March made their largest monthly jump since 2006 and will stop falling in most major metropolitan areas by the end of this year.
The average value of a single-family home in the U.S. is now $146,200 — a 0.5% slip in the first quarter from the fourth and a 3.1% drop in March from the same month last year. But compared with February, they’re up 0.5% — a more than five-year high.
And although they’re down 24.6% from their $193,800 peak in May 2007, home values are now back to their late-2003 levels — and will likely hit bottom around the country by next year, the website reported.
“Low home values paired with extraordinarily low mortgage rates should serve as a signal to consumers that now is a good time to buy,” Zillow wrote in its report Thursday. “As more home buyers get off the fence, home sales, both existing and new, will continue increasing and help stabilize home prices in the long run.”
In 19 of the 30 large regions considered by Zillow, which provides housing data, prices will reach their floor by the end of this year, if they haven’t already. Phoenix and Miami, where the housing downturn was especially pronounced, are predicted to enjoy the largest value increases by March 2013 of 6.5% and 5.6%, respectively.
San Diego’s expected 1.7% rise will be the fourth largest; Riverside will have the sixth largest with 1.6% and Los Angeles prices will be elevated 0.9% after reaching bottom this year.
But some regions will continue to watch home values deflate through next year, with Atlanta suffering the sharpest decline with a forecasted 4.1% drop. Nationwide, home prices are expected to slump 0.4% over the next year.
And in cities such as Las Vegas, New York and Portland, Ore., the bottom is still difficult to discern, according to Zillow.
At the moment, homeownership is at its lowest point in a more than a decade, with 62% of Americans saying they own their own residence, according to pollster Gallup. Last year, 68% of respondents said they were homeowners.
More Americans than ever before also seem to be underwater. This year, a record low 53% said their home is worth more than when they bought it.
But other signs in the housing market are promising. Rents are increasing year-over-year in more than 70% of Zillow’s metro areas, making home buying more attractive to consumers for whom increasingly affordable homes and low mortgage rates are already a lure.
And although foreclosures are down in March, sales of homes whose owners were previously in default make up 20.5% of all sales — a new high — which could put more downward pressure on prices.
“The pieces of a housing bottom and recovery are falling into place,” Zillow said in its report.