Photo (cc) by JoeInSouthernCA
If you’re thinking of buying or selling a home, it’s smart to keep an eye on housing prices. The housing market offers clues about whether you might be paying too much and about timing — when to sell, when to wait and when to walk away.
Reading the tea leaves
But how do you read those clues when, right now, some people are talking about a new housing bubble? Depending on where you live, you may hear buyers complain that they’ve made offer after offer only to lose to other buyers who got there first or offered more money or all cash. Stories of bidding wars are particularly common in Western cities, where sellers have the upper hand, Zillow says.
Nationally, real estate is not overvalued. (WikiHow explains how to know if your local market is experiencing a bubble.) U.S. home prices grew 6.3 percent between May 2014 and this May, says a CNBC report citing CoreLogic’s analysis. The report says home prices are reaching new highs in some states:
Thirty-three states are now at or within 10 percent of their price peaks, going back to January 1976, when CoreLogic began tracking. Ten states — Alaska, Colorado, Iowa, Nebraska, New York, North Carolina, Oklahoma, Tennessee, Texas and Vermont — reached new price peaks.
Despite the growth, overall home prices still are 8.4 percent below their highest point, which was nine years ago, in April 2006.
Top sellers’ markets
Sellers’ markets are where buyers outnumber the homes for sale and sellers can keep prices high. Cities with tight inventories — fewer homes for sale — typically have stronger job growth, says The New York Times. Here are the top sellers’ markets, according to Zillow:
- San Jose, California
- San Francisco
- Dallas-Fort Worth
- Los Angeles
- Portland, Oregon
- Sacramento, California
- Nashville, Tennessee
Top buyers’ markets
The reverse is true in buyers’ markets where more homes are for sale than there are buyers. Buyers currently have more power in the Midwest and East, Zillow says, listing these top buyers’ markets:
- Providence, Rhode Island
- Tampa, Florida
- Orlando, Florida
A slower housing market overall
Despite the intensity in those sellers’ markets, a new study by the widely followed S&P/Case-Shiller U.S. National Home Price Index says that home prices are growing slowly, at an annual rate of 4.2 percent in April, down from 4.3 percent the month before.
If these reports sound contradictory, that’s real estate for you, and it’s normal, economists say. In real estate, the key word is local. Although some cities’ markets are booming because of job growth and shortages of homes for sale, across the country, sales aren’t as hot. They’re not stagnant, but after home prices rose quickly in 2013 and 2014 they did not sustain the pace.
The new normal
Today, real estate values are improving but more slowly. Stan Humphries, chief economist for Zillow, tells Forbes:
“Normal home value growth is usually between 3 percent and 5 percent annually, well below growth rates of just a year ago, so the current pace is far more sustainable. Local market dynamics — rather than larger, national economic trends — are dictating market conditions on the ground in individual communities, as they should. All of these trends signal good news for the market.”
“After 15 years of volatility, U.S. home prices have reached a level of stability and are rising at low, single-digit rates,” says The Real Deal, a real-estate blog. After the housing market’s recently chaotic history, this new normal is a welcome thing.
The 50 fastest-growing U.S. metros
Here is a look at yearly home-price growth in the 50 fastest-growing U.S. metro areas. The numbers are from the Federal Housing Finance Agency, which uses different data than Core Logic:
|Metropolitan Area||Rank||April 2014-2015 increase (percent)||5-year increase (percent)|
|Naples-Immokalee-Marco Island, Florida||1||20.07||33.58|
|Port St. Lucie, Florida||2||13.23||25.05|
|Palm Bay-Melbourne-Titusville, Florida||4||11.78||9.47|
|Deltona-Daytona Beach-Ormond Beach, Florida||5||11.29||8.11|
|Miami-Miami Beach-Kendall, Florida||6||11.28||25.34|
|Cape Coral-Fort Myers, Floridaa||7||10.73||32.51|
|Punta Gorda, Florida||9||10.59||10.64|
|San Francisco-Redwood City-South San Francisco, California||10||10.57||36.83|
|Houston-The Woodlands-Sugar Land, Texas||11||10.43||25.76|
|Mount Vernon-Anacortes, Washington||12||10.41||-0.37|
|West Palm Beach-Boca Raton-Delray Beach, Florida||13||10.3||21.35|
|Las Vegas-Henderson-Paradise, Nevada||16||10.01||27|
|Austin-Round Rock, Texas||17||9.84||29.4|
|Santa Cruz-Watsonville, California||20||9.48||21.67|
|Fort Lauderdale-Pompano Beach-Deerfield Beach, Florida||22||9.29||25.68|
|San Jose-Sunnyvale-Santa Clara, California||26||9.12||38.07|
|Fort Collins, Colorado||27||9.03||22.32|
|North Port-Sarasota-Bradenton, Florida||30||8.7||20.88|
|Santa Rosa, California||31||8.63||27.8|
|Crestview-Fort Walton Beach-Destin, Florida||32||8.59||4.03|
|Tampa-St. Petersburg-Clearwater, Florida||36||8.25||11.26|
|Atlanta-Sandy Springs-Roswell, Georgia||42||7.87||6.19|
|Charleston-North Charleston, South Carolina||44||7.71||8.65|
|Santa Maria-Santa Barbara, California||46||7.66||18.31|
|Spartanburg, South Carolina||48||7.62||0.43|
|San Antonio-New Braunfels, Texas||50||7.5||15.6|
What is the market doing in your area? Is it tempting to jump in? Share with us in comments below or on our Facebook page.