Appreciation Rates in the US Expected to Slow Considerably in 2014

By the end of last year national home values in the US were up by 6.4% year on year during the fourth quarter, according to a report from Zillow. This report shows the Home Value Index had reached $169,100 by the end of the fourth quarter, an increase of 1.4% compared to the end of the third quarter, and an increase of 0.6% compared to the previous month of November.

These figures are all extremely encouraging, but the article in Propertywire points out that after home appreciation values peaked at 7.1% in August then the rate of annual home value appreciation dropped to below 7% during the final quarter of the year. In 2013 the metro markets, including the Bay Area and Southern California were the first to begin recovering and had shown good home value appreciation throughout much of the year. However by the end of the year home value appreciation had largely cooled off.

© BRAD -

© BRAD –

Appreciation rates in San Francisco, San Jose, San Diego and Los Angeles were all flat or slowing down during the three months comprising the fourth quarter compared to the previous month. This is something that real estate experts welcomed as there was concern about these markets entering into bubble territory due to increasing mortgage rates making homes less affordable for buyers.

As 2014 gets underway appreciation rates are expected to slow down quite a bit. Throughout the country values are predicted to rise by another 4.8% by the end of the year, according to the Zillow Home Value Forecast. Even though Zillow anticipates that all but one of the 35 largest metro areas will show appreciation in 2014 these rates will vary considerably. While the annual appreciation rate could reach 16.1% in Riverside, California, it could be as low as just 0.4% in Kansas City. Only St. Louis is expected to show zero appreciation this year, but it’s thought none of the areas will show the same sort of rise in values seen in 2013.

It’s thought affordability issues will help slow down many of the markets that saw huge appreciation rates last year, but experts also anticipate that more homes will be built. In addition, fewer investors are expected to purchase property this year, improving market conditions for buyers. Experts point out that a completely normal market is still some way off, but it’s anticipated things will gradually become more normalized as there will be fewer foreclosures and fewer homeowners in negative equity.

About Allison Halliday

Allison Halliday is a Realty Biz News contributing writer. She handles International Real Estate and is a seasoned blogger.