Pro Teck Valuation Services’ March Home Value Forecast (HVF) updates research and examines the factors that cause a housing bubble and why no national housing bubble is expected even in the hottest markets. The Home Value Forecast cited Collateral Analytics’ previously developed “bubble indicator” for the real estate market, which has determined that in the past, real estate crashes always have followed a five year period of 150 percent or greater total appreciation.
“The Los Angeles metro area, which leads this month’s Home Value Forecast top 10, has appreciated 48 percent over the past five years. It’s an impressive run, but far from bubble territory,” said Tom O’Grady, CEO of Pro Teck Valuation Services. “In addition, our forecast for the next five years still shows that home prices in the Los Angeles market will see a steady uptick, but no bubble and will remain below their 2006 peak.”
This month’s HVF update shows the current median home price of $449,300 is still well below the peak of $551,500 in the fourth quarter of 2006. The five-year forecast is based in part on the 30-year mortgage interest rates rising slowly and reaching six percent in late 2019. According to the HVF update (and Collateral Analytics), over this period, home prices are predicted to steadily appreciate reaching $503,900 by the fourth quarter of 2019, but still short of their 2006 peak.
This month’s Home Value Forecast update also includes a listing of the 10 best and 10 worst performing metros as ranked by its market condition ranking model. The rankings are run for the single- family home markets in the top 200 CBSAs on a monthly basis. They 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.
“California is leading the charge in our March Home Value Forecast with nine of our top 10 metros from the state. One of the primary drivers of the appreciation we are seeing in these California metros is the limited inventory of homes, often leading to bidding wars. All nine metros have four or less months of remaining inventory with the Santa Rosa metro as low as 1.73,” added O’Grady.
March’s top CBSAs include:
►Los Angeles-Long Beach-Glendale, Calif.
►San Luis Obispo-Paso Robles-Arroyo Grande, Calif.
►Anaheim-Santa Ana-Irvine, Calif.
►Oxnard-Thousand Oaks-Ventura, Calif.
►Santa Rosa, Calif.
►Oakland-Hayward-Berkeley, Calif.
►San Rafael, Calif.
►Nassau County-Suffolk County, N.Y.
►San Diego-Carlsbad, Calif.
►San Francisco-Redwood City-South San Francisco, Calif.
“As we’ve discussed in previous updates, it’s hard to sustain a market turnaround with high numbers of foreclosure sales. All of our entrants in the bottom 10 have high foreclosure ratios and high months of remaining inventory,” added O’Grady. “The good news is that there are many positive trends, including the decrease in the number of active sales in the majority of the markets.”
The bottom CBSAs for March were:
►Akron, Ohio
►Deltona-Daytona Beach-Ormond Beach, Calif.
►Gary, Ind.
►Jacksonville, Fla.
►Lakeland-Winter Haven, Fla.
►Palm Bay-Melbourne-Titusville, Fla.
►Pensacola-Ferry Pass-Brent, Fla.
►Tallahassee, Fla.
►West Palm Beach-Boca Rotan-Delray Beach, Fla.
►Little Rock-North Little Rock-Conway, Ariz.
