Property values in the United States are still being affected by foreclosure re-sales, high unemployment and negative equity, according to the latest real estate market report from Zillow.
The rental market is stronger, however. Median rents rose 2% from February 2011 to February 2012, the February Zillow Real Estate Market Report shows. It also reveals year on year gains for nearly 68% of metropolitan areas covered by the index.
Chicago metro rents, for example, increased 8.6% over the past year, in comparison to an 11% fall in home values over the same period. In the Philadelphia metro, rents are up 14.8% annually while home values have fallen 5.4% year on year.
Overall home values continued to fall, declining 4.5 and only 8% of metro areas covered by the Zillow Home Value Index saw home values rise.
Foreclosures continue to be a key driver in keeping home values down. Foreclosure re-sales made up 20.3% of all sales in February, slightly higher than their previous peak of 20.2% of all sales in March 2011. Foreclosure re-sales made up 19.1% of all sales in February 2011.
The analytics firm said that foreclosure re-sales are strongly affected by seasonality, and January and February are typically months with high percentages of foreclosure re-sales.
‘We have made it through the worst of the housing recession with a bottom on the horizon, but the deep backlog of foreclosures, elevated negative equity and high unemployment are all still obstacles on the road to recovery,’ said Zillow senior economist Svenja Gudell.
‘The rental market remains a bright spot in the housing market, where many markets, especially hard hit ones, are experiencing significant annual rent appreciation and drawing the attention of investors. Converting distressed and vacant properties into rental units will reduce the oversupply of homes and speed up the recovery process,’ Gudell added.
In the short term, national monthly rents declined slightly from January to February, falling 0.5% to $1,212. Home values fell 0.5% during the same period to $145,400.