Recent Signals to Loosen Credit Box Will Help Markets; New Overall Top and Bottom Markets Updated
WALTHAM, MA – October 22, 2014 – Pro Teck Valuation Services’ September Home Value Forecast (HVF) examines the link between income and home price appreciation and why lower income neighborhoods have been left out of the housing recovery. In the update, the authors take a deeper dive into Washington State and the Seattle metro area in particular, where much of the market is experiencing positive home price appreciation. In addition, new top and bottom metro areas are reported for the month.
“Seattle shows us how income and access to credit drives home values and why across the country we are seeing strong appreciation in wealthy areas but slower recovery in areas of lower income,” said Tom O’Grady, CEO of Pro Teck Valuation Services. “The good news is that federal housing regulators have signaled that change is on the way to loosen some lending standards making mortgages more accessible for individuals with less than stellar credit. Combined with the potential lowering of the minimum down payment to 3% for some borrowers, this should have a positive impact on communities with lower incomes,” added O’Grady.
Seattle tops the monthly HVF list in lowest home inventory and highest average selling price. However, the HVF authors highlight that neighborhoods within the Seattle metro area are experiencing different rates of housing recovery by using the Collateral Analytics Home Price Forecast and focusing on three representative communities (Bellevue, Carnation, and Auburn).
As reported in the HVF update, Bellevue is one of Seattle’s more affluent areas, with average homes selling for almost twice the metro’s average. Homes lost 25% of their value during the housing crash but have rebounded steadily, making up almost all of their value.
Carnation tracked closely with the overall Seattle metro average, but did not experience the aggressive peak. Since 2011 this area, which has seen an influx of higher incomes, has outperformed the average according to the HVF.
Finally, Auburn is the least expensive, lowest income community highlighted in the HVF, with current real estate averaging half of Seattle metro’s average. Auburn real estate has not experienced the rebound the others have, with current prices still 20% below pre-crash peaks. In addition, REO as a percentage of sales was 12.9% as opposed to Bellevue, which was 1.8%. The article points out that distressed sales can have a long-lasting effect on a recovery. When there are many REO sales, with an REO discount, the impact is also felt on regular sales.
“The availability of credit is impacting these three communities differently. After the housing crash, most credit has become very tight, particularly in markets such as Auburn with lower income buyers with less than perfect credit,” added O’Grady. “The post-housing crisis regulations, which were put in place to prove that borrowers had the ability to repay their mortgage, has had the unintended consequence of blocking many first time and lower income borrowers.”
This month’s 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 and REO activity.
September’s top CBSAs include:
Houston-The Woodlands-Sugar Land, TX
Oak Harbor, WA
San Antonio-New Braunfels, TX
College Station-Bryan, TX
Omaha-Council Bluffs, NE
The bottom CBSAs for September were:
Lakeland-Winter Haven, FL
Miami-Miami Beach-Kendall, FL
Tampa-St. Petersburg-Clearwater, FL
West Palm Beach-Boca-Rotan-Del Ray, FL
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.
Reporters interested in national, regional or metro level housing data tailored to meet story needs, please email your inquiry to firstname.lastname@example.org.
A Core Based Statistical Area (CBSA) is a U.S. geographic area defined by the Office of Management and Budget (OMB) based around an urban center of at least 10,000 people and adjacent areas that are socioeconomically tied to the urban center by commuting. The term “CBSA” refers collectively to both Metropolitan Statistical Areas (MSA) and micropolitan areas. Micropolitan areas are based around Census Bureau-defined urban clusters of at least 10,000 and fewer than 50,000 people. Metropolitan Statistical Areas (MSAs) are defined as urban clusters of more than 50,000 people.
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