U.S. metro areas are experiencing housing recoveries due to conditions that have been in place over the past five years, according to Pro Teck Valuation Services’ January Home Value Forecast.
The combination of very low levels of new construction, favorable price affordability and a strong rental market in many parts of the country, says Tom O’Grady, CEO of Pro Teck Valuation Services, lead to an outlook for the residential real estate market in 2013 that is quite different from only a year ago.
A number of short-term housing indicators show improvement in some of the most important metro areas in the country where home prices increased significantly in 2012. As a result “the available inventory of homes for sale has decreased by double-digit rates and buyer sentiment has improved markedly,” he said.
The Buy-Sell Indicator is an efficient metric 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 the Home Value Forecast.
Which is why, he argues, the most recent changes in early 2013 reaffirm “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 for the single-family home markets in the top 200 CBSAs. Core-based statistical areas refer collectively to both metropolitan statistical areas and micropolitan areas and reflect monthly data based on indicators that besides sales/listing activity and prices, months of remaining inventory and days on market include foreclosure and REO activity.
The top four metros in January are in South Florida and Texas.
The difference between the well performing markets in Florida and Texas is that while Florida markets experienced bubble and bust conditions in the last real estate cycle and are now very appealing to both U.S. homebuyers and foreign investors, argues Sklarz, certain Texas markets have been in the top 10 list for a number of months and because their prices were never extended, they “did not experience meaningful price corrections.”
The January top ten markets are Austin-Round Rock-San Marcos, Texas; Baltimore-Towson, Md.; Boston-Quincy, Mass.; Charlotte-Gastonia-Rock Hill, N.C.-S.C.; Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla.; Houston-Sugar Land-Baytown, Texas; Los Angeles-Long Beach-Glendale, Calif.; Miami-Miami Beach-Kendall, Fla.; Minneapolis-St. Paul-Bloomington, Minn.; and Seattle-Bellevue-Everett, Wash.
The bottom CBSAs for January represent a different mix from the greater New York-New Jersey-Connecticut area where inventories remain at high levels, despite “a fair percentage of positive trends,” Sklarz said.