Will buyers care if a housing market is 'healthy'?

Real Estate Agent with MVP Realty SL3217142

SEATTLE – Dec. 17, 2013 – The nation’s healthiest housing markets in October are clustered in California and the rest of the West, according to the newly released product from Zillow – the Zillow Market Health Index.

Zillow’s Market Health Index purports to measure, on a scale from 0 to 10, the current health of a region’s housing market compared to other national housing markets. Calculated monthly at the ZIP code, neighborhood, city, county, metro and state levels, Zillow says it’s a key component of its re-designed local information pages.

According to Zillow, it uses 10 different metrics to determine whether an area is healthy or not. The Market Health Index looks at home values (measured by the Zillow Home Value Index), the time homes stay on the market, foreclosures, delinquencies and negative equity.

If an area has a value of 8 on the Market Health Index, for example, the region is healthier than 80 percent of all comparable areas covered by Zillow. However, a low market score doesn’t necessarily mean that a specific market performs poorly. According to Zillow, it simply means that other markets have factors like higher home value appreciation or lower foreclosure activity.

In October, among the country’s top 30 largest metro markets covered by Zillow, the five healthiest were San Jose (Market Health Index of 9), San Francisco (8.9), Los Angeles (8.6), San Diego (8.4) and Denver (8.1).

“Rapid home value appreciation in the West, particularly California, is currently having a very positive effect on a number of other factors, including negative equity, foreclosure activity and the overall financial health of local homeowners,” says Zillow Chief Economist Dr. Stan Humphries. “But that same rapid appreciation may cause affordability issues in the future in these markets, leading to potentially unhealthy conditions in the future.”

But “one number on its own can’t tell the full story,” Humphries adds. “The housing market is complex.”


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