Home Values in More Than 1,000 U.S. Cities Expected to Be More Expensive than Ever Within the Next Year

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527 Cities that Experienced Home Value Declines of 10% or More Now at or Close to Peak, According to Q1 Zillow Real Estate Market Reports; Affordability Problems Could Spread as Interest Rates Rise

-U.S. home values climbed 5.7 percent year-over year in the first quarter, to a Zillow® Home Value Index of $169,800. National home values have climbed year-over-year for 21 consecutive months.

-Rents rose 2.7 percent year-over-year in the first quarter and 0.9 percent compared to the fourth quarter of 2013, to a Zillow Rent Index of $1,315.

-Inventory fell in March for the first time in six months, down 0.5 percent year-over-year.

SEATTLE, April 22, 2014 /PRNewswire/ -- Declines in home values experienced during the recession have already been, or are close to being, erased in almost 20 percent of metro housing markets nationwide as values continue to rise, according to the first quarter Zillow Real Estate Market Reports[i]. U.S. home values climbed 5.7 percent year-over year in the first quarter, to a Zillow Home Value Index[ii] of $169,800.

Home values nationwide rose 0.5% from the fourth quarter of 2013, the ninth straight quarter of increasing home values. U.S. home values are expected to rise another 3.3 percent through the first quarter of 2015, according to the Zillow Home Value Forecast[iii].

Nationally, home values remain 13.5 percent below their 2007 peak, after falling 22.6 percent during the recession before bottoming in 2011. But the housing recession is almost entirely in the rearview mirror in 1,080 of the more than 8,700 cities and towns covered by Zillow, with home values already at or expected to reach pre-recession levels in the next year, including in many hard-hit areas. Among 6,781 cities and towns that experienced home value declines of 10 percent or more during the recession, values in 527 have either fully recovered or are expected to recover fully by the first quarter of 2015.

Among the more than 300 metros covered by Zillow, home values in 60 have already exceeded or are expected to exceed their pre-recession peaks in the next year, including in Dallas, Houston, Denver, Pittsburgh, San Antonio, San Jose and Austin. In a majority of metros, housing affordability is and will remain strong even as prices continue to rise. But homes in a handful of metros – including San Francisco, Los Angeles, San Jose and San Diego – are already unaffordable, with the share of residents' incomes currently devoted to monthly mortgage payments exceeding historic norms.

"The lows of the housing recession are becoming an increasingly distant memory as home values reach new highs and homes become more expensive than ever in many areas. This is a remarkable milestone coming only two and a half years after the end of the worst housing recession since the Great Depression, and is a testament to just how robust this housing recovery has been," said Zillow Chief Economist Dr. Stan Humphries. "So far, this steady appreciation has not created affordability issues in the majority of places. But there are a handful of markets where affordability is again a challenge, even with mortgage interest rates incredibly low. Mortgage interest rates won't stay low forever. And rents have also been marching steadily higher for several years. As a result, the housing affordability issues we're already seeing in select markets could become a much more widespread concern a few years from now. As affordability worsens, more residents will be forced to search for affordable housing farther from urban job centers, and home values in some areas may have to come down."

Nationally, rents rose 2.7 percent year-over-year in the first quarter and 0.9 percent compared to the fourth quarter of 2013, to a Zillow Rent Index[iv] of $1,315. U.S. rents have risen year-over-year for more than two years straight.

The inventory of homes listed for sale on Zillow[v] at the end of the first quarter fell by 0.5 percent year-over-year, after showing annual gains in each of the past six months. Inventory fell month-over-month in each of the three months of the first quarter.

About Zillow:
Zillow, Inc. (NASDAQ: Z) operates the largest home-related marketplaces on mobile and the Web, with a complementary portfolio of brands and products that help people find vital information about homes, and connect with the best local professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist . Dr. Humphries and his team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. The Zillow, Inc. portfolio includes Zillow.com®, Zillow Mobile, Zillow Mortgage MarketplaceZillow Rentals, Zillow Digs®, Postlets®, Diverse Solutions®, Agentfolio®, Mortech®, HotPads™ and StreetEasy®. The company is headquartered in Seattle.

Zillow.com, Zillow, Postlets, Mortech, Diverse Solutions, StreetEasy, Agentfolio and Digs are registered trademarks of Zillow, Inc. HotPads is a trademark of Zillow, Inc.

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