Market condition trends across the U.S. continue to improve. While almost 70% of CBSAs in the Collateral Analytics market conditions ranking were “normal” or above in July, a month later in August that number rose to over 76% — with only 1.4% coming in at “weak” or “distressed.”
August, 2016 Rankings:
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August, 2014 Rankings: In August 2014, only 45% of CBSAs were listed as normal or above, with 8.5% of the CBSAs in the “weak” or “distressed” category. Since then, much of the REO surplus has been worked back into the market, leaving pockets of slower recoveries driven by local factors.
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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.
Home Value Forecast Top Ten CBSAs:
The Boise, ID CBSA tops our list this month, as a 49% drop in active listing has made for a very limited supply of available homes. Boise home prices are at an all-time high, with projected steady growth for the next five years.
Home Value Forecast Bottom Ten CBSAs:
Miami being in the bottom ten this month may come as a surprise to some. While there has been drastic improvement, a major decrease in investor-driven purchases and foreign buyers has slowed the recovery.
The still large REO inventory is also slowing the recovery. REO as a percentage of sales is at 13%, which is still well above the 3-5% norm of a healthy market.
Comparing Miami’s REO percentage to Boise brings it into perspective. Boise’s REO is under 4%, thus the market is being driven by supply and demand fundamentals.
In Miami, the price “gap” between REO and regular sale prices is slowing the recovery.
In the years before the crash, the “gap” was getting smaller, as one can see by the two lines getting closer up until 2006. The reason for this is simple, with a small population of REO properties and high demand, the “drag” of REO properties on price is negated.
Today, the number of REOs is still large, and still impacting appreciation, as can be seen in the Collateral Analytics Price Forecast for the Miami CBSA.
As the numbers of REOs comes down, the REO discount will shrink as the recovery stabilizes the market.
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 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 Compliance Officer, Pro Teck Valuation Services