Rising Home Prices in July Driven by Low Property Supply

A decline in reported foreclosures and falling property sales has resulted in home prices rising in all 42 counties tracked by DataQuick in its Property Intelligence Report.

The San Diego-based analytic firm’s July monthly report revealed that 25 of the 42 markets experienced home price appreciation in excess of 10%. DataQuick revealed that home value increases on an annual basis ranged from 0.29% in Suffolk County, N.Y., to 30.66% in Sacramento.

Other notable markets that saw a major uptick in home prices are Oakland, Calif., at 29.36%, while Las Vegas had a 27.54% increase and Phoenix was up 23.41%.

Meanwhile, Richmond, Calif., which became the first city in the nation to try eminent domain as a way to stop foreclosures, had its home prices rise by 25.38% in July compared to a year ago.

Overall, home prices are increasing at an average of more than 13.49% in July 2013 compared to last year, the firm reported.

“While economic drivers including job growth and low interest rates are contributing to increases in demand nationwide, prices in markets with tight supplies of available properties are skyrocketing,” said Gordon Crawford, vice president of analytics at DataQuick.

“The main concern in this situation is that it is unclear if strong home price increases would be happening in the presence of more normal sales volume.”

For example, markets with a higher number of sales and foreclosures have experienced lower rates of home price growth. Many Florida cities that had existing (and unoccupied) properties available to be listed for sale on the open market but for lower average home prices are on this list.

In contrast, those cities that had a drop in sales and fewer notices of foreclosure saw price appreciation. These are markets primarily in California and Nevada where new construction is low and many homeowners can’t sell their properties because they are in negative equity.

Other highlights from the July PIR include home sales increased in 28 of the reported 42 counties over the last year, while 28 counties had foreclosures decrease on an annual basis.

“The moderate underlying fundamental home price drivers and economic uncertainty will eventually contribute to reductions in demand for housing and dampened home price growth, although the timing of this is very uncertain,” DataQuick said in the report.