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The Latest or ig i nat ion ANALYTICS Home Values Rise as Neighborhoods Begin to Coalesce H ome values maintained their upward trajectory in February after climbing for the 16th straight month, according to Zillow's monthly Home Value Index. The index registered a national value of $158,100, which represents a slight 0.1 percent increase from January and a 5.8 percent jump from February 2012, Zillow reported. The yearly gain is the second largest increase since August 2006. In January, the yearover-year gain was 6 percent. At the same time, all 30 of the largest metros tracked by the online real estate marketplace saw monthly and yearly price growth. "The housing market recovery has continued to gain momentum over the past several months and looks firmly entrenched as we enter S e c on da r y M a r k e t a na ly t ic s se r v ic i ng Zillow reports stronger residential valuations data in Q1 2013. "As more supply comes on line, home value appreciation rates will moderate and stabilize, marking the final transition from a recovering market to a healthy and sustainable market." — Dr. Stan Humphries, Zillow the 2013 spring home shopping season," said Dr. Stan Humphries, Zillow chief economist. "Rising home values will free many more homeowners from negative equity, allowing some of them to list their homes for sale which, in turn, will ease supply constraints. Burgeoning new construction will also help bring more supply into the marketplace. As more supply comes on line, home value appreciation rates will moderate and stabilize, marking the final transition from a recovering market to a healthy and sustainable market," he added. Of the 30 largest markets, the five markets that saw the biggest year-over-year increase were Phoenix (+22.9 percent), San Francisco (+18.6 percent), Las Vegas (+18.1 percent), San Jose (+17.1 Home Improvement NAHB's Improving Markets Index grew to 274 because of gains in housing permits, home prices, and employment. T he National Association of Home Builders' (NAHB) Improving Markets Index (IMI) showed no signs of slowing down in March, rising for its seventh consecutive month. The index, the product of a partnership between NAHB and First American, recognizes markets that have shown long-term improvement from their respective troughs in the 60 | The M Report areas of housing permits, home prices, and employment. According to NAHB, 274 metros are now on the mend, a net gain of 15 since February. While 19 markets were dropped, 34 new areas were added, including Birmingham, Alabama; Santa Barbara, California; Colorado Springs, Colorado; and Bloomington, Indiana. For the second straight month, metros in all 50 states—as well as the District of Columbia— are represented on the list of improving markets. NAHB chairman Rick Judson said the index's growth and diversity proves "[t]he expanding housing recovery is energizing communities nationwide by generating jobs and local tax revenues," though he noted the housing market could serve as a greater catalyst for growth "if credit for building and buying homes was more readily available." percent), and Sacramento (+15.3 percent). Out of the 352 metros Zillow tracks, 73 saw prices decline from a year ago. According to Zillow's forecast, annual price gains should slow to a rate of 3.2 percent over a 12-month period ending in February 2014. This rate represents a decrease from the 5.6 percent annual rate of appreciation seen last year, but the rate is closer to historic norms of 3 percent to 5 percent, Zillow explained. The Seattle-based company also noted a slight increase in national rents, which recorded a value of $1,282, up 0.1 percent from January and up 4.5 percent from February 2012. The number of homes lost to foreclosure stayed on its downward path, with February seeing 5.25 homes foreclosed on out of every 10,000 homes, down 2.5 homes from a year ago. Foreclosure sales, which were mixed, accounted for 13.71 percent of sales in February, up 1.2 percentage points from January, but still down 3.5 percentage points year-over-year, Zillow reported. NAHB chief economist David Crowe agreed that while the trend is positive, there are still obstacles in the way. "With just over 75 percent of the 361 metros covered by the IMI now seen as improving, the housing market is on considerably more solid footing than it was at this time last year," Crowe said. "While we expect this positive momentum to continue, it's important to understand that many markets are just beginning the recovery process, and that numerous issues—from credit availability to the rising cost of building materials and emerging lot shortages—are slowing the impact of that advancement."

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