Phoenix Leads Nation in Home Price Gains

Phoenix-area home values have been climbing at the fastest rate of any major metropolitan area this year and the dramatic surge may continue to outpace the rest of the nation through the next year, according to the latest report released Tuesday by Zillow Inc..

The Zillow Home Value Index showed the Phoenix area had an average home value of $149,400 during the third quarter of this year.

That’s a 5.9 percent jump from the the previous quarter and a 20.4 percent-spike year-over-year — both of which were by far the biggest increases among 30 major metro areas the index examines, as well as the national average.

For example, the second largest quarter-over-quarter increase was 3.9 percent in Las Vegas, followed by a 3.8 percent rise in Denver, the report said. Year-over-year, San Jose, Calif. trailed far behind Phoenix at No. 2 with its 9.7 percent jump in home values, followed by the 8.8 percent rise in Denver.

Nationwide, the average home value was $153,800 in the third quarter — up by only 1.3 percent from the previous quarter and just a 3.2 percent rise year-over-year.

Although the steep incline of the Phoenix housing market will likely taper moving forward, Zillow anticipates the area will maintain its reign through the next year, the report said.

By the third quarter of next year, the Zillow Home Forecast expects that Phoenix home values will rise by another 8.5 percent, which, again, would be the largest projected increase of any major market.

“We’re likely seeing home values fall back into the negative range in some markets due to the close of the traditional home-buying season,” Stan Humphries, chief economist at Zillow, said in the report. “While that doesn’t mean the recovery has come off the rails – in fact, most markets have hit bottom – it does present a confusing environment for consumers. Looking forward, we expect to see home values bump.”