Pro Teck Valuation Services’ June Home Value Forecast (HVF) explores individual housing indicators used in the HVF market rankings, including Active Listings, Months of Remaining Inventory (MRI), Sales Price/List Price Ratio and Sold Price Percent Change, demonstrating that the housing recovery is widespread. The update also examines affordability and home prices now compared to the peak to show that even the markets showing the greatest annual appreciation have not reached the historic peak prices and the low affordability of 2006 and would not be considered another bubble. New top and bottom markets with overall market condition ranking model are also reported for June.
In this month’s Home Value Forecast update, the authors state that active listings in a market have a dramatic effect on real estate market dynamics – the fewer homes on the market indicate more competition that results in home price appreciation. Three of the top 20 markets for active listings, which are located in Hawaii, Texas, and California, have a decrease in listings by more than 60 percent on a rolling year-over-year basis. All of the markets have a decrease in active listings of more than 40 percent.
The authors also explored MRI, which is the amount of homes that are for sale in a particular month divided by the number that usually sell within an average month (for the area). In a stable market, there are usually around 6 months of housing inventory. For the HVF top 20 metros, which are located in California, Texas, Nevada, Washington, and Florida, the MRI are all below four, signifying a very tight real estate market.
“The good news is that the U.S. real estate market is in the midst of a rebound. While every market is different, and every neighborhood is different, we at Home Value Forecast see positive trends now being the norm instead of the exception,” said Tom O’Grady, CEO of Pro Teck Valuation Services. “California has been leading the way in the recovery, followed by other non-judicial states and finally judicial states like Florida where processing foreclosure properties had delayed recovery time but positive trends are now evident.”
The HVF update examined the top five markets in terms of price appreciation, which can be the barometer of a heated market. Those markets include Naples-Immokalee-Marco Island, FL; Santa Maria-Santa Barbara, CA; Stockton-Lodi, CA; Madera, CA; and, Detroit-Dearborn-Livonia, MI. Using Collateral Analytics Forecast, the authors also explore whether those markets are heading for a bubble and find that while they certainly gained steam over the past two years, the markets are still far short of their 2006 peaks. The forecast for these markets is positive over the next 3-5 years but will not sustain the recent ‘recovery’ pace as post bubble market fundamentals of affordability and price take over.
“The big difference this time around is that mortgage credit is much tighter due to increased regulation and the zero down, pick-a-pay, stated income, type of exotic mortgages that created the last bubble are no longer an option,” added O’Grady.
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.
“Not surprisingly, the majority of the overall top ten markets are in California again,” said O’Grady. “As indicated by research above, California is leading MRI, active listings, active price change percent, and sales to list price ratios. These hot markets are leading to very attractive prices for sellers.”
June’s top CBSAs include:
San Rafael, CA
Santa Rosa, CA
Houston-The Woodlands-Sugar Land, TX
San Diego-Carlsbad, CA
San Francisco-Redwood City-South San Francisco, CA
San Jose-Sunnyvale-Santa Clara, CA
“Although many of the indicators in the bottom ten are trending positive, we are still seeing more than six months of inventory in all but one market and high foreclosure ratios,” added O’Grady. “Until those indicators improve, those areas are likely to see weaker housing conditions for the coming months.”
The bottom CBSAs for June were:
Lakeland-Winter Haven, FL
Tampa-St. Petersburg-Clearwater, FL