Median rents rose 3 percent from January 2011 to January 2012, but home values continued to fall, declining 4.6 percent during that period, according to the January Zillow® Real Estate Market Reports(1).
The Zillow Rent Index(2) (ZRI), which was released for the first time today, showed year-over-year gains for 69.2 percent of metropolitan areas(3) covered by the ZRI. By contrast, only 7.3 percent of metro areas covered by the Zillow Home Value Index (ZHVI)(4) saw home values rise.
In some large markets, rents rose almost as much as values fell. In the Chicago metro, the ZRI rose 9.1 percent year-over-year, while home values fell 10.4 percent during the same period. In the Minneapolis-St. Paul metro, rents rose 11 percent and home values fell 8.1 percent.
"The flourishing rental market is the silver lining to the nation's housing downturn," said Zillow Chief Economist Dr. Stan Humphries. "We haven't had a good way to quantify what is happening with rental rates until now, and the inaugural Zillow Rent Index shows us a healthy and growing rental market across the majority of the country, even as home values continue to fall.
"While it seems that rents are rising at the expense of home values, the opposite is true. A thriving rental market will stimulate home sales as investors snap up low-priced inventory to convert to rentals. That, in turn, will lower the number of homes on the market, which will eventually help put a floor under the value of all homes. Moreover, rising rents increase demand as buying becomes more attractive than renting because of low purchase prices and higher rents."
In the short term, national monthly rents declined slightly from December 2011 to January 2012, falling 0.3 percent to $1,218. Home values fell 0.5 percent during the same period to $146,200.
Additionally, foreclosures ticked up slightly in January, when lenders foreclosed 8.4 out of every 10,000 homes. That was up from December, when 8.1 out of every 10,000 homes were foreclosed. Foreclosure re-sales(5) also rose on both a month-over-month and year-over-year basis. Nearly one-in-five (19.5 percent) of homes sold in January were foreclosure re-sales.
|Metropolitan Areas||Zillow Home Value Index||Zillow Rent Index|
|January 2012||YoY Change||January 2012||YoY Change|
|Miami-Fort Lauderdale, Fla.||$138,100||-2.2%||$1,579||6.0%|
|Minneapolis-St. Paul, Minn.||$162,800||-8.1%||$1,378||11.0%|
(1) The data in Zillow's Real Estate Market Reports is aggregated from public sources by a number of data providers for 276 core-based statistical areas dating back to 1996. Mortgage and home loan data is typically recorded in each county and publicly available through a county recorder's office.
(2) The Zillow Rent Index is the median Rent Zestimate (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow's database, regardless of whether they are currently listed for rent. It is expressed in dollars.
(3) Metropolitan areas refer to core-based statistical areas, as designated by the U.S. Census Bureau.
(4) The Zillow Home Value Index is the median Zestimate® valuation for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars.
(5) The percentage of home sales in a given month in the United States where the home was foreclosed upon within the previous 12 months (e.g. sales of bank-owned homes after the bank repossessed a home during a foreclosure).
SOURCE Zillow, Inc.