It seems like the majority of housing markets today are hitting new highs. Limited inventory and a backlog in construction has left a void in available housing stock, leading to a strong real estate market filled with competitive buyers, increased prices and many same-day sales.
But, just how hot is the market? At Home Value Forecast, we looked at the 200 CBSAs we track today and compared them to three years ago — this is what we found:
Today, 70% of the CBSAs we track have a Market Condition Rating of “Strong” or “Hot,” compared to 22.5% in 2014. Conversely, 39% were considered “Soft” or Weak” in 2014, today that number is down to 10.5%.
So, what’s the biggest difference between now and then? How have so many housing markets been able to bounce back? The answer is in the number of foreclosure sales.
Foreclosure Sales Impact on a Market
Foreclosures were a big issue after the housing crisis, flooding markets with discounted properties as markets fell. During the recovery, metros with larger proportions of foreclosure sales as a percent of market sales saw a muted recovery. Nowhere was this more evident than in Florida.
Florida had a large home price run-up before the crash, leading to more foreclosures and longer market stagnation. While foreclosure topped out at 40-50% sales, they were still elevated three years ago.
Below is information from the Daytona, Orlando and Palm Bay CBSAs today and three years ago.
Things that stand out:
- All have gone from a Market Condition of “Weak” to “Strong”
- Foreclosure Sales as a Percentage of Market Sales for all three CBSAs has dropped from the 30% range to 5-7%, more indicative of a balanced market
- Sold price appreciation has been between 32-46% in the three-year period
- Months of Remaining Inventory for all is under three months, continuing to put upward pressure on prices
Palm Bay, Florida is a good example of a market on the mend. As the number of Real Estate Owned (REO) increased (2008-2014), the “spread” in price between regular sales and market sales became more pronounced, hitting a low of 29% in Q4 2010. The REO discount is now under 10%.
From 2015 on, regular sales started to make up more of the market, closing the spread between REO and regular prices and fueling market appreciation.
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 insight 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