Pro Teck Valuation Services’ January Home Value Forecast (HVF) Update examines how many of the U.S. metros are experiencing housing recoveries and explores a number of short term housing indicators that gauge market sentiment and help identify turning points in the real estate market.
“The outlook for the residential real estate market in 2013 is quite different from a year ago. A number of important metros have experienced significant price increases in the past year as the available inventory of homes for sale has decreased by double-digit rates and buyer sentiment has improved markedly,” said Tom O’Grady, CEO of Pro Teck Valuation Services.
“The conditions for a quick recovery have actually been in place for some time due to the combination of very low levels of new construction over the past five years, very favorable price and affordability levels, and a strong rental market in many parts of the country.”
HVF tracks a number of market indicators to forecast where home prices are headed and HVF partner Collateral Analytics has created proprietary indices to provide “buy” and “sell” signal for individual markets. One index is based on the change in or slope of home prices and can be useful for timing market entries and exits for individual metros, cities, ZIP codes or neighborhood. The HVF authors highlight Boston with their “Buy-Sell Indicator” and show how it identified the Boston market tops in 1989 and 2005 and bottoms in 1983 and 1996.
“The Buy-Sell Indicator as a trend following indicator works well for home prices because they typically exhibit a significant amount of momentum once they get going in a particular direction whether it is upward, sideways, or downward,” said Michael Sklarz, principal of Collateral Analytics and contributing author to Home Value Forecast. “The most recent signal in early 2013 is another confirmation that an important cyclical upswing in Boston home prices is underway.”
This month’s Home Value Forecast update also includes a listing of the 10 best and 10 worst performing metros as ranked by our market condition ranking model. The rankings are run for the single family home markets in the top 200 CBSAs on a monthly basis to highlight the best and worst metros with regard to a number of leading real estate market indicators, including: sales/listing activity and prices, months of remaining inventory (MRI), days on market (DOM), sold-to-list price ratio and foreclosure and REO activity.
“The top ranked metros in the current month include markets from all major regions of the U.S. Two of the top markets are in South Florida while another two are in Texas. The Florida markets are among those which experienced bubble and bust conditions in the last real estate cycle and are now very appealing to both U.S. home buyers and foreign investors,” added Sklarz. “A number of Texas markets have been in the Top 10 list for a number of months and did not experience meaningful price corrections since their prices were never extended.”
►January’s top CBSAs include:
Austin-Round Rock-San Marcos, TX
Baltimore-Towson, MD
Boston-Quincy, MA
Charlotte-Gastonia-Rock Hill, NC-SC
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL
Houston-Sugar Land-Baytown, TX
Los Angeles-Long Beach-Glendale, CA
Miami-Miami Beach-Kendall, FL
Minneapolis-St. Paul-Bloomington, MN-WI
Seattle-Bellevue-Everett, WA
“The bottom-ranked metros also represent an interesting mix with two being in the greater New York-New Jersey-Connecticut area. Most have high single or double-digit months of remaining inventory. However, even those in the Bottom 10 list are showing a fair percentage of positive trends. This is quite different from last year when the majority of the Bottom 10 markets had most or all of their indicators trending negative,” added Sklarz.
►The bottom CBSAs for January were:
Boise City-Nampa, ID
Little Rock-North Little Rock-Conway, AR
Nassau-Suffolk, NY
New Haven-Milford, CT
Spartanburg, SC
North Port-Bradenton-Sarasota, FL
Portland-Vancouver-Hillsboro, OR-WA
Shreveport-Bossier City, LA
Syracuse, NY
Toledo, OH
