In running our methodology for Home Value Forecast’s Top Ten CBSAs this month, we were struck by an amazing fact; 29 of the CBSAs we track received our highest raw score possible, compared to zero a year ago. What do these communities have in common?
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Twenty-one of the twenty-nine are west of the Rockies, a trend we’ve discussed before. Some, like Punta Gorda, Florida are still years away from matching pre-crash price highs while others, like San Jose, California are making new record highs each month.
Looking at inventory uncovers the real driver. The below chart shows new housing units by year from 1968 to the present. Each recession is shaded in grey.
While housing units are on the upswing, the numbers are still at historical lows. That, combined with approximately 2.5 million single family homes becoming rental units since the crash has left the US with a limited housing supply.
Looking back at the 29 CBSAs, below shows months of remaining inventory (MRI) and the percent change in active listings:
|CBSA Name||MRI||MRI %Change||Active||Active %Change|
|Anaheim-Santa Ana-Irvine, CA||3.83||-25.05||7289||-17.94|
|Boise City, ID||2.63||-44.63||3059||-42.80|
|Durham-Chapel Hill, NC||3.89||-25.05||1998||-16.23|
|Grand Rapids-Wyoming, MI||3.51||-18.56||4045||-16.13|
|Lafayette-West Lafayette, IN||3.61||-25.57||815||-24.12|
|Los Angeles-Long Beach-Glendale, CA||3.78||-26.17||16313||-22.03|
|Mount Vernon-Anacortes, WA||2.83||-57.95||447||-51.88|
|Oak Harbor, WA||2.80||-58.46||438||-53.45|
|Oxnard-Thousand Oaks-Ventura, CA||3.66||-29.48||2545||-16.01|
|Punta Gorda, FL||3.93||-34.28||1425||-29.39|
|Salt Lake City, UT||3.45||-34.16||3744||-28.86|
|San Antonio-New Braunfels, TX||3.04||-29.47||6302||-28.71|
|San Diego-Carlsbad, CA||2.22||-33.53||4738||-29.06|
|San Jose-Sunnyvale-Santa Clara, CA||1.84||-20.69||1883||-13.98|
The 29 above all have less than four months of inventory – a seller’s market. Also, all 29 have seen double digit percent decreases in active listings, indicating that the phenomenon will not be changing anytime soon.
Months of Remaining Inventory (current number of listings/past year monthly sales rate) is an important leading indicator. It combines both supply and demand in one number, giving a more holistic view of the state of the market. We have found that various levels of Months of Remaining Inventory (MRI) correspond well to area market conditions: for example, a Strong market will have below 5 months of inventory, while a Balanced market will have between 6 to 10 months.
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:
Tie-breaker used to choose our top ten this month was months of remaining inventory. Since it is a leading indicator, we thought it would give us the best sense of what markets will continue to be hot. All ten are west, with six California, three Washington state and one Idaho CBSA.
Bottom 10 CBSAs:
There are no communities ranked “distressed” this month, with only Atlantic City and Jacksonville, NC hitting our “weak” level because of the percentage of foreclosure sales. All eight of the others are deemed “soft” markets per our rating.
In Midland, TX you can see the swift impact changes in the oil industry can have. With many oil rigs idle, families are moving out. A 169% increase in active home listings and 207% increase in MRI are just two example of how quickly change can come.
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.
The monthly Home Value Forecast update also includes a listing of the 10 best and 10 worst performing metros as ranked by its market condition ranking model. The rankings are run for the single-family home markets in the top 200 CBSAs on a monthly basis. They highlight the best and worst metros with regard to a number of leading real estate market indicators including: sales/listing activity and prices, months of remaining inventory (MRI), days on market (DOM), sold-to-list price ratio and foreclosure percentage and REO activity.
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 Appraiser, Pro Teck Valuation Services
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.