The Zillow Home Value Index for the Savannah metro area (Chatham, Bryan and Effingham counties) rose to $136,700 in July, up 2.1 percent from a year ago.
That index has risen about 8 percent since the January 2012 low.
Of course, it’s worth noting that we’re still about 19 percent below the peak of 2006/2007.
Longtime readers might recall that local home prices fell about as much as predicted in this column, but I’ll admit that prices have rebounded more quickly than I anticipated.
The Realtors that I know seem to feel pretty good about the current market for home sales, and it’s clear that many younger adults have bought homes since prices bottomed.
In recent months it seems like the market has been buoyed by the pent-up demand from step-up buyers.
So what happens from here?
First, it’s always worth noting that market conditions vary widely across the metro area and even from neighborhood to neighborhood.
The Zillow estimates suggest that local price increases have slowed, despite some of the rhetoric you might be hearing about prices going up, up, up.
And there are some compelling reasons to think that prices might stagnate for a considerable period.
During the mania of the housing boom, real estate professionals and other analysts lost track of certain fundamental relationships. Home prices are directly related to the amount of inventory, to comparable rental costs and to an area’s prevailing wages.
We also know that there are meaningful historical patterns, like the ratio of existing home sales to new home sales and the percentage of existing homes that pass to a new owner each year.
None of those measures suggest significant price increases in the coming months.
We still have too many homes on the market and sales are still below historical norms.
The market might seem great compared to a few years ago, but that doesn’t mean that we’ve seen a full recovery.
Rising interest rates are likely to be a further drag on prices prices. Areas west of I-95 will also be impacted by the unwinding of a generous U.S. Department of Agriculture loan program.
And we’re also entering the traditionally slower season for home sales.
All that said, it also seems unlikely that we’ll see significant price declines. Several factors seem to be supporting prices, including high rents and limited availability of properties in some areas.
In a future column, we’ll take a closer look at some of Zillow’s data for individual municipalities.
City Talk appears every Sunday and Tuesday. Bill Dawers can be reached via billdawers@comcast.net and http://www.billdawers.com. Send mail to 10 East 32nd St., Savannah, Ga. 31401.
