Hi, this is Tom O’Grady, the CEO of Pro Teck Services. Pro Teck Services and Collateral Analytics have a partnership that puts out Home Value Forecast. Home Value Forecast provides metrics on housing markets throughout the United States, as well as monthly releases on the state of the housing market and trends that we see.
In our latest monthly real estate update we talked about how high priced homes lead the overall market on both the upside and downside of the housing cycle. In our first chart here, we look at three housing markets in Los Angeles county, tracking of price per living area, with Manhattan Beach being the highest price market followed by Burbank, followed by Lancaster. What you can see here are these arrows that show inflection points, so when the high value homes in Manhattan beach start to turn upwards, you can see that shortly after that Burbank and then Lancaster [turn up as well]. We’ve seen this in the last three ‘up’ real estate cycles over the last 40 years. If we look at the most recent real estate cycle we can see that Manhattan Beach again being the high value market has led the upturn, followed by Burbank and we expect that Lancaster will soon follow.
On this slide we look at again price per living area. You can see that in these upscale cities in the Bay Area we’re seeing that sold prices are at all time highs. The media is often focused on distressed markets, [and] they are missing that the recovery is underway. The fact that these high value markets are taking off tells us that a lot of the mid and lower markets are going to soon follow.
This last slide looks at the phenomenon within a single market, Palo Alto. We’ve stratified the price per square foot in Palo Alto by living size. The largest and most expensive houses were the first to rise in the past year, compared to the smaller and relatively less expensive ones. In addition, their rate of appreciation has ben much higher. Again, this suggests that high priced homes are market leaders both across different markets and within the same market. A full text of this update including our top and bottom real estate market ranking can be viewed on our HVF page.