Trulia Inc. has released the latest findings from the Trulia Price Monitor and the Trulia Rent Monitor. These indices are the earliest leading indicators available of trends in home prices and rents. Based on the for-sale homes and rentals listed on Trulia, these monitors take into account changes in the mix of listed homes and reflect trends in prices and rents for similar homes in similar neighborhoods through June 30, 2013. Nationally, asking home prices rose 10.7 percent year-over-year (Y-o-Y) in June. Excluding foreclosures, prices jumped 11.4 percent Y-o-Y, signaling that the current rise in asking prices is not primarily driven by the shift away from foreclosure to non-distressed homes for sale. However, the rate of increase in asking prices will eventually slow down as mortgage rates rise, inventory expands, and investor demand falls.
Nationally, asking home prices bottomed in February 2012, but the turnaround has been uneven. Prices first began to rebound two years ago in San Jose, Phoenix, Denver, Miami, and a few other housing markets where job growth or bargain buying started boosting prices earlier. Meanwhile, prices continued to fall in several East Coast and Midwest markets until three to six months ago. Now with the housing recovery in full swing, asking prices rose in 99 of the 100 largest metros. Among these recently bottoming markets, prices rose more than seven percent in Edison-New Brunswick, N.J., Chicago, Lake County-Kenosha County, Ill.-Wis., and Baltimore.
Marking its biggest Y-o-Y increase since January, rents rose 2.8 percent Y-o-Y nationally in June. Rents climbed most in Houston, Miami and Tampa-St. Petersburg, but fell in markets where asking prices were up more than 30 percent: Las Vegas, Oakland and Sacramento. In fact, asking prices outpaced rents in 22 of the 25 largest rental markets. Only in Houston, New York and Philadelphia did rents rise faster than asking prices.
“Rising home prices have swept the country,” said Jed Kolko, Trulia’s chief economist. “Local markets that suffered most during the housing crisis are seeing the biggest price rebounds today. Now even markets that escaped the worst of the bust, like Chicago and Baltimore, are seeing prices climb. However, these runaway price gains won’t last: both rising mortgage rates and slowly growing inventories should start tapping the brakes on home prices, preventing them from rising back into bubble territory.”