Home Value Forecast examines influence of the availability of credit in several markets including San Fransico, Detroit, and Phoenix; update includes new top and bottom rankings for the month
WALTHAM, MA – September 24, 2015 – Pro Teck Valuation Services’ Home Value Forecast (HVF) September update takes a look at the availability of credit and why the housing recoveries in many markets differ dramatically. Also, HVF’s top and bottom market rankings for the month are updated.
Last month, the HVF team examined price appreciation and other indicators’ impact on the housing recoveries in San Francisco and Detroit. In this month’s report, the HVF authors look at regular average sold price versus total mortgage trends in those markets to bring this phenomenon into focus. They find that in San Francisco, buyers have averaged 20+% down over the last 14 years (LTV ratios 67–82%), while Detroit has averaged LTV between 86% and 101%.
The HVF Update also references Comptroller of the Currency Tom Curran’s comments to the City Club of Cleveland, which were reported by National Mortgage News. In the speech, Curry said the OCC had informed banks that the 90% LTV limit does not “create an ironclad ban on lending above that limit, even if there are no credit enhancements.”
“This should be good news to cities like Cleveland that have not benefitted as much as other communities from the broad housing recovery,” said Tom O’Grady, CEO of Pro Teck Valuation Services. “Some loosening of credit policy will be needed for the recovery to penetrate deeply into the communities hardest hit by the housing crisis.”
The HVF authors also examine the Phoenix-Mesa-Scottsdale CBSA, which is in the top ten this month, and find that LTV levels also vary from neighborhood to neighborhood within the metro area.
The HVF update reported that in Scottsdale, average home prices have been rebounding steadily since 2011 and now are 20% below all-time highs after dropping 37.5%. Apache Junction, AZ, another city within the CBSA, is still 36% below its all-time high. The authors state that at the height of the housing crisis, homes in Apache Junction lost more than half their value. The community also had more homeowners with high LTV loans foreclosed, leading to a steeper drop in home prices and a slower recovery.
“Apache Junction, just like Detroit and Cleveland, would benefit from higher LTV limits to spur the housing recovery,” added O’Grady. “Higher LTV in conjunction with many of the other credit safeguards that have been adopted in the past five years should protect banks and safeguard the economy from a repeat of 2007.”
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, foreclosure percentage and REO activity.
“There are only two California markets (Salinas and Stockton-Lodi) in the top ten this month,” added O’Grady. “We have the addition of two East Coast markets in North Carolina (Durham-Chapel Hill and Wilmington). All of the top ten markets have fewer than four months of remaining housing inventory (MRI).”
August’s top CBSAs include:
- Bellingham, WA
- Boise City, ID
- Durham-Chapel Hill, NC
- Mt. Vernon-Anacortes, WA
- Oak Harbor, WA
- Phoenix-Mesa-Scottsdale, AZ
- Pueblo, CO
- Salinas, CA
- Stockton-Lodi, CA
- Wilmington, NC
“The bottom ten markets all have MRI above five, and three markets are above 10 months. With the exception of Midland, TX, they continue to be plagued with higher foreclosures as a percentage of sales in each market,” said O’Grady. “In addition to Midland, both El Paso and McAllen, TX are in the bottom 10. It will also be curious to note whether changes in the energy costs are impacting prices for the longer term or if this is a short term situation in those Texas markets.”
The bottom CBSAs for August were:
- Detroit-Dearborn-Livonia, MI
- El Paso, TX
- Huntsville, AL
- Lake County-Kenosha County, IL-WI
- McAllen-Edinburg-Mission, TX
- Midland, TX
- Atlantic City-Hammonton, NJ
- Hagerstown-Martinsburg, MD-WV
- Jacksonville, NC
- Saginaw, MI
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.
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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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