February Housing Performance Improves, But Will Growth Continue?
Housing markets hit hardest by the most recent financial downturn are experiencing a quicker pricing recovery than the rest of the country, according to a monthly report from DataQuick.
The San Diego-based analytic provider said in its February Property Intelligence Report that home price growth in Arizona, California, Florida and Nevada has exceeded 10% over the last year. Meanwhile, other market rates have fluctuated around 2.5%.
DataQuick’s PIR leverages its national property database to assess 42 of the largest counties in the nation using valuation trends, REO inventory trends and sales trends metrics.
Overall, there was a rise in home values in 34 of the 42 reported counties over the last month and quarter, DataQuick said, revealing that the markets continue to rise toward certain stabilization despite looming economic factors such as unsustainable deficit levels and European fiscal issues.
Furthermore, on an annual basis, 35 counties saw price growth.
From January to February, the largest price increases took place in Maricopa County, which represents the Phoenix metropolitan area, up 1.45%.
Behind Maricopa County rounding out the top five cities with the greatest level of price changes month-over month were Sacramento (an increase of 1.31%), Oakland (1.22%), Detroit (1.21%) and Las Vegas (1.07%).
Additionally, these same five cities also had some of the largest property value upticks on a yearly basis, up 24.18%, 16.31%, 12.80%, 14.97% and 14.84%, respectively.
“Recent home price growth rates, however, might be overcompensating for an overcorrecting decline in home prices during the downturn,” said Gordon Crawford, vice president of analytics for DataQuick. “As a result, we expect the growth rates in these markets to slow to a level that is more in line with the rest of the country’s home price growth.”
Other metrics analyzed in the report that show an improvement in housing performance is a steady decrease in foreclosures, even though there was a decrease in sales.
Foreclosures dropped in 24 of the 42 counties in February, while 25 counties had fewer foreclosures processed through this time period compared to last year.
One of the reasons why Maricopa County saw the highest price increases in this report is that it had approximately 500 less finalized foreclosures in February than the prior month. In February 2012, 2,569 foreclosures were handled in the Phoenix metropolitan area.
Notable cities that had significant drops in monthly foreclosures include Columbus, down by 196, Riverside saw a decrease of 157 foreclosed housing units, Dallas foreclosures fell by 108, and there were 92 less completed foreclosures in Washington, D.C.
Conversely, sales rose in 22 of the 42 counties on a monthly basis. Over the last year, more sales occurred in February 2013 in 30 of the counties.
DataQuick said February’s housing outlook reports positive supply and demand factors, but it is uncertain whether these improvements will persist throughout 2013. Although the unemployment rate fell to 7.7% in February and the number of housing starts and permits increased, Crawford said the market is still stabilizing and trying to reach normal levels of success found in the past.
“Uncertainty factors lead to a difficult time valuing real estate, dampening the activity of both buyers and sellers,” Crawford continued. “Employment rose by 236,000 jobs in February, and although that is a favorable number, we have seen this in previous years where employment growth is positive, only to decline in later months of the year.”