By Cory Hopkins
According to the newly released Zillow Market Health Index, the nation's healthiest housing markets in October were clustered in California and the rest of the West. Zillow's Market Health Index, calculated on a scale from 0 to 10, is a new measure designed to illustrate the current health of a region's housing market relative to similar markets nationwide. Because no one number can accurately convey every dynamic in a given area, the Market Health Index incorporates 10 separate measures of housing market health. Calculated monthly at the ZIP Code, neighborhood, city, county, metro and state levels, it is a key component of Zillow's newly redesigned local information pages, aimed at offering users more data, more easily.
In October, among the country's top 30 largest metro markets covered by Zillow, the healthiest was San Jose (pictured above), with a Market Health Index of 9, followed by 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. But that same rapid appreciation may cause affordability issues in the future in these markets, leading to potentially unhealthy conditions in the future," said Zillow Chief Economist Dr. Stan Humphries. "The housing market is complex, and while individual statistics can be useful in describing a single aspect of a given market, one number on its own can't tell the full story. As markets continue to evolve and recover, the Market Health Index will reflect these changing trends, offering consumers a valuable tool on which to base their decisions."
The Zillow Market Health Index is formed from 10 different metrics, accounting for changes in home values (as measured by the Zillow Home Value Index), the time homes stay on the market, foreclosures, delinquencies and negative equity. If a given area has a value of 8 on the Market Health Index, the region is healthier than 80 percent of all comparable areas covered by Zillow. The Market Health Index scores markets relative to one another; a low Market Health Index score does not necessarily indicate that a market is performing poorly, only that other markets are experiencing factors such as higher home value appreciation or lower foreclosure activity.
10 HEALTHIEST MARKETS, AMONG LARGE METROS
Metro Oct. 2013 Market Health Index (0-10) Oct. 2013 Zillow Home Value Index YoY % Change in Zillow Home Value Index Q3 2013 Neg. Equity Rate # Homes Foreclosed in Oct. (out of 10,000) San Jose, Calif. 9.0 $731,500 19.6 7.6% 1.0 San Francisco 8.9 $636,900 24.1 12.4% 2.4 Los Angeles 8.6 $487,600 20.1 13.2% 2.2 San Diego 8.4 $437,500 20.4 14.7% 2.2 Denver 8.1 $246,500 9.9 11.9% 0.3 Boston 7.4 $343,800 9.2 12.0% 1.0 Pittsburgh 7.4 $111,400 1.8 12.1% 1.1 Portland, Ore. 6.5 $258,000 13.6 16.9% 3.6 New York 6.0 $354,100 3.4 17.3% 1.1 Sacramento, Calif. 6.0 $284,500 30.4 23.4% 4.6