As we move into Spring — the year’s most active home selling season — Home Value Forecast is taking a look at trends over the last 12 months by comparing “snapshots” from today and a year ago.
Home Value Forecast’s further analysis of the 200+ CBSAs it tracks found that the average (mean) home selling price increased by 9.02% with a median of 7.87% from February 2015 to February 2016. Also, February 2016 saw a 12.35% increase in the number of sales and a 12.48% decrease in Months of Remaining Inventory from 6.21 to 5.44, all encouraging signs for a seller’s market.
Top Ten CBSAs with Year-Over-Year Increase
The ten CBSAs with the largest 12-month percent increase (minimum 700 monthly sales) were:
The top ten above are an interesting cross-section of the U.S. housing market, with five getting a “strong” rating from our market condition index, four getting “soft,” and one “good.” The four with “soft” ratings were all mostly due to foreclosure levels still being on the higher side, over 10% as a percentage of regular sales.
A Deeper Dive: Palm Bay vs. Cape Coral
The top two are both in Florida but have drastically different market condition ratings. Let’s look at those two more closely.
Looking across some of the major market indicators, one could get the impression that the Palm Bay CBSA is in better shape than Cape Coral. For instance, Palm Bay has:
- a lower MRI (4.42 versus 7.16)
- lower Sold Days on Market (71 versus 80)
- lower Active Listing Days on Market (62 versus 80)
- better Sale Price/Listing Price Ratio (97.28 versus 96.96).
So what’s making the Palm Bay market soft? The answer – foreclosures.
Foreclosures as a percentage of regular market sales is 16.1% for Palm Bay compared to 7.97% for Cape Coral. Foreclosures typically sell for 20% less than a comparable home on the regular market, putting a drag on home appreciation. This drag can be seen in the Collateral Analytics Home Price Forecast.
Employment opportunities also appear to contribute to the above trend. Cape Coral employment level is at an all-time high, while Palm Bay still has not reached pre-crash levels—contributing to the sluggish recovery.
CBSA Winners and Losers
Each month, Home Value Forecast uses a number of leading real estate market-based indicators to rank the single-family home markets in the top 200 CBSAs and highlight the strongest and weakest metros.
The ranking system is purely objective and is based on directional trends. Each indicator is given a score based on whether the trend is positive, negative or neutral for that series. For example, a declining trend in active listings would be positive, as will be an increasing trend in average price. A composite score for each CBSA is calculated by summing the directional scores of each of its indicators. From the universe of the top 200 CBSAs, we highlight each month the CBSAs which have the highest and lowest composite scores.
The tables below show the individual market indicators that are being used to rank the CBSAs, along with the most recent values and the percent changes. We have color-coded each of the indicators to help visualize whether it is moving in a positive (green) or negative (red) direction.
Top 10 CBSAs
Boston, MA makes a showing in the top ten this month, as limited inventory is leading to increased competition.
Bottom 10 CBSAs
The downward pressure on Midland, TX home prices we wrote about last month is now showing up in the numbers. Active sale price is down -5.93% in Midland, and down -3.53% in Killeen-Temple, TX.
As a reminder, Home Value Forecast’s ranking system is purely objective and ranks from the strongest to weakest CBSAs. Each CBSA gets a numerical score that relates to a market condition – from best to worst: Hot; Strong; Good; Normal; Soft; Weak; Distressed.
While we call the above our bottom ten, they are much healthier than the bottom ten from last year. For example – all bottom ten CBSAs last year had Foreclosure Sales as a percentage of Regular Sales between 25% – 40%, landing in our “weak” real estate market condition ranking. This year, no CBSA was ranked “weak,” all bottom ten were in our “soft” market ranking.
Further analysis shows 32.30% of CBSAs this month were rated “Hot” or “Strong,” compared to 14.16% this time last year. We feel these positive trends will continue as long as interest rates remain attractive.
About Home Value Forecast
Home Value Forecast (HVF) is brought to you by Pro Teck Valuation Services. HVF provides insight into the current and future state of the U.S. housing market, and delivers 14 market snapshot graphs from the top 30 CBSAs.
HVF is built using numerous housing and economic data sources. The top 750 CBSAs as well as data down to the ZIP code level for approximately 18,000 ZIPs are available with a corporate subscription to the service.
Also, Pro Teck Valuation Services offers reporters the following:
- National, regional or metro level housing data
- Monthly Updates and HVF Insights articles
- By-request data for your story — custom data, heat maps and charts are available
- Expert commentary from Home Value Forecast Editorial Committee:
- Tom O’Grady, Chief Executive Officer, Pro Teck Valuation Services
- Michael Sklarz, PH.D., President, Collateral Analytics
- Jeff Dickstein, Chief Compliance Officer, Pro Teck Valuation Services