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Home Value Forecast: A Year in Review

This month’s Home Value Forecast examines trends over the past twelve months in a number of residential real estate categories that best predict a recovering housing market. We will list the top three CBSAs from 2014 and 2015 in the following categories:

  • Highest Current Sales Price
  • Twelve Month Active List Price Appreciation
  • Current Months of Remaining Inventory
  • Twelve Month Sales Price Appreciation

Happy Holidays from all of us at Pro Teck Valuation Services!

Current Sale Price

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The same three California metros: San Francisco, San Rafael and San Jose, top this list in 2014 and 2015.  California CBSAs accounted for 13 of the top 15 spots in this category, with Honolulu, HI (number four) and Vineyard Haven, MA (number seven) rounding out the rest of the list.

Last year we forecasted that San Francisco’s home prices would start to stabilize – that did not happen, as average sold price is now over $1.2 million. One reason for this was that interest rates have stayed at historic lows, making homes more affordable at all price points. With interest rate increases anticipated in the near future, we will keep an eye on the impact on home prices.

Twelve-Month Active List Price Appreciation

“Active price” is the median price a home is listing for at a moment in time. We like to look at list price as a good reflection of the market, because it takes into account people’s perceptions of where prices are headed.

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College Station-Bryan, TX realized a 20% growth rate between 2000 and 2013 according to the most recent census data. An influx of professionals working in the Research Valley biocorridor has strained the housing stock and changed the type, size and cost of new housing. This trend should only continue as Texas A&M and the community drive advancements in the biotherapeutic and biopharmaceutical industries.

Salinas, CA was hit hard by the crash, with home prices losing more than 50% of their value. As other areas in California are hitting new highs, Salinas is steadily making up market value, and should continue its recovery.

Real-Estate-Market-Trends-December-2015-1

Current Months of Remaining Inventory (MRI)

MRI is another indicator that shows how “hot” a market is at a particular time. MRI equals the amount of households on the market divided by the number that sell per month. If an area has a high MRI (let’s say 10 months), it means that the market is saturated — a buyer’s market. If MRI is low (below 3 months) then it becomes a seller’s market. A “balanced” market will have approximately six months of inventory at any given time.

Today, the top three markets are West Coast, all around two months inventory – leading to fierce competition for homes and many selling for above asking price.

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Our other two leaders in 2014, San Jose (2.03) and Santa Cruz (2.93), remained hot markets in 2015. In all, 24 CBSAs have less than three months of inventory, leading to limited housing supply and fueling price increases.

Twelve-Month Sales Price Appreciation

Sales price appreciation is a good thing, but the statistic by itself can be deceiving. Our top three for the year all had more than 20% appreciation, yet all were decimated by the housing crisis. What these numbers reflect is that the market has responded to the bargains that are out there, and that the housing market has begun to reflect supply/demand fundamentals.

Our top three were all heavily impacted by the housing crash and are now seeing steady appreciation as they recover.  Two of the three communities will at or near all-time highs within five years according to the below Collateral Analytics Home Price Forecast.

Real-Estate-Market-Trends-December-2015-2

Of the 200 markets we track at Home Value Forecast, 44 had greater than 10% appreciation this year, and only five had a negative change of more than 5%.

Here’s to positive developments continuing in 2016 and beyond!

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, each month we highlight 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

Real-Estate-Market-Trends-November-2015-Top-Markets

Our top ten have been fairly consistent lately, as limited supply and low interest rates continue to push these markets. This list will change if we see an increase in interest rates early in 2016.

Bottom 10 CBSAs

Real-Estate-Market-Trends-November-2015-Bottom-Markets

Nine of the bottom ten CBSAs have double digit foreclosure sales as a percentage of total home sales – hindering recovery. Midland, TX, the outlier at 3.54% foreclosure, is seeing the impact of low oil prices and closing oil fields.

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.  To learn more about Home Value Forecast and Pro Teck’s full suite of residential real estate valuation products, visit www.proteckservices.com.  You can also find Pro Teck on Twitter at @ProTeckServices.

About Pro Teck Valuation Services

Pro Teck Valuation Services is a national provider of residential real estate valuations.  For more than 30 years, we have worked with lenders, loan servicers and investors to improve risk management through superior real estate collateral information.  Pro Teck offers a comprehensive suite of services including real estate data and analytics, field valuations, review/due diligence and appraisals. Please visit us at www.proteckservices.com.

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Media Contact:  Thomas Hoff, Pro Teck Valuation Services
781-314-1669 or thoff@protk.com