Rapid home price appreciation typically leads to a slowdown in home sales, and that is what happened to most of the counties analyzed in DataQuick’s October Property Intelligence Report.
The PIR shows that 33 out of 42 reported counties saw a decline in sales during October, which is more than double the amount of counties that had a drop in properties sold the previous month. The county with the largest decrease in sales was Shelby, Tenn. (Memphis), down more than 27% in October from September.
Other counties that experienced a large drop-off in month-over-month sales activity included Cook and Dupage, Ill. (Chicago) and Jackson, Mo. (Kansas City), which all had more than 20% decreases.
“As more homeowners with negative equity experience home price growth, they will become more motivated to list their property because positive equity means they are in a position to sell without being required to bring cash to the closing table,” says Gordon Crawford, vice president of analytics for DataQuick.
Despite sales of existing homes being low and recent construction activity remaining below normal levels, the recent trend of rapid property price appreciation continued as all 42 counties tracked by the San Diego-based analytic firm reported home value growth in October. This marks the second consecutive month that every county experienced an uptick in property values on a monthly, quarterly and yearly basis.
Meanwhile, foreclosures decreased in 22 of the 42 reported counties over the last month, while 27 counties had fewer foreclosures than a year ago.
“Homes listed for sale and overall sales will increase as more borrowers find themselves no longer underwater,” Crawford says. “However, we can expect purchases by investors to continue to be a large share of all purchases, as a lack of affordable properties and tight credit standards will continue to drive high rental demand and keep many entry-level homebuyers out of the market.”