Real Estate Data for the Rest of Us

Where Homes Are Going Fastest This Spring

For-sale homes are disappearing from the market fastest in the San Francisco Bay Area, Denver, Seattle, and southern California. The 2014 spring market is moving slightly faster than 2013, led by the lowest price tier of homes.

Spring home buyers might be surprised that national housing data have pointed to a recent market slowdown. Although nationally new construction starts and existing home sales have been sluggish in recent months, buyers in many local markets will need to move a bit faster this year than last year in order to snag their dream house.

To measure how fast the homes in a market are moving, we calculated the share of homes for sale on Trulia two months ago (on February 14, 2014) that are still on the market today (as of April 14, 2014). Faster-moving markets have a lower percentage of homes still on the market after two months, while slower-moving markets have a higher percentage.

Our two-month measure is similar to days on market (DOM): in general, housing markets with more inventory and fewer buyers will have a higher share of for-sale homes remaining on the market after two months and a higher median DOM. But we prefer our two-month measure over DOM as an indicator of how quickly homes in a market are moving for the following reason: if lots of new inventory suddenly comes onto the market, then the median days on market could go down thanks to all those newly listed homes. Therefore, a low median DOM could indicate that (1) buyers are snapping up homes quickly, so homes aren’t staying on the market long (i.e. it’s a seller’s market) or (2) a lot of new inventory has just come onto the market (i.e. it’s a buyer’s market). As a result, it’s difficult to decipher what’s really going on based on DOM alone, making this traditional measure potentially misleading.

Inventory Is Up This Spring, But It’s Going Fast
Nationally, 55% of the homes listed for sale in mid-February were still on the market in mid-April. That’s down a bit from 56% for the same period last year. The slight quickening of the national market is being driven mostly by homes priced at the low end of the market. To see this, we divided each of the 100 largest U.S. metros evenly into three price tiers (with each metro having its own price cutoffs based on what’s considered high-end, mid-range, and low-end locally). On average, at the national level, the low-price tier moved fastest, with 49% of the homes listed two months earlier still on the market in mid-April; in contrast, 62% of homes in the high-price tier were still on the market after two months.

Furthermore, the low price tier sped up more than the other tiers compared with a year ago, dropping 3 points in 2014 versus 2013, compared with 1-point drops for the middle and high tiers. As always, though, the national trend hides big differences in local markets, many of which are quickening while others are slowing.

FastestMovingMarkets_ByPriceTier_BarGraph

The Market is Fastest in the Bay Area, Quickening in New York, and Slowing in SoCal
The share of homes for sale today after being on the market two months ago ranges from less than one third in the San Francisco Bay Area to more than two thirds in several markets in the Northeast and South. The fastest-moving markets are Oakland, San Jose, and San Francisco, where less than one third of homes on the market two months ago were still for sale in mid-April 2014. Outside of California, the fastest-moving markets are Denver and Seattle. Fast-moving markets tend to have larger price gains: in eight of the 10 fastest-moving markets, the year-over-year increase in asking prices exceeded the national average of 10%.

America’s Top 10 Fastest-Moving Housing Markets

# U.S. Metro

Share of homes still for sale after being listed for at least two months, mid-April 2014

Share of homes still for sale after being listed for at least two months, mid-April 2013

Difference in share still for sale, 2014 vs 2013

Asking prices, Y-o-Y % Change, March 2014

1 Oakland, CA

29%

31%

-2%

22.7%

2 San Jose, CA

31%

35%

-4%

13.4%

3 San Francisco, CA

32%

36%

-4%

15.1%

4 Denver, CO

38%

47%

-8%

9.6%

5 San Diego, CA

41%

45%

-4%

14.0%

6 Seattle, WA

43%

49%

-6%

11.2%

7 Los Angeles, CA

44%

40%

4%

17.0%

8 Orange County, CA

45%

38%

6%

14.9%

9 Sacramento, CA

45%

41%

4%

22.2%

10 Middlesex County, MA

46%

52%

-6%

7.3%

Note: Among the 100 largest U.S. metros. The two-month shares and the difference are rounded to the nearest percentage point, and the difference was calculated before rounding; therefore, the rounded difference might not equal the difference between the rounded shares. To download the findings for the 100 largest U.S. metros, click here.

Some of the fastest-moving markets have slowed down since last year. While the share of homes for sale that are still on the market two months later in 2014 fell in the fastest-moving markets in 2013 (i.e., those markets sped up), it increased in Los Angeles, Orange County, and Sacramento (i.e., those markets slowed down). The share also increased considerably in Ventura County (from 38% to 48%) and Phoenix (48% to 55%) and moderately in Riverside-San Bernardino (from 49% to 53%). This means that many of the formerly hard-hit markets that led the housing recovery with price gains, investor buying, and bidding wars are now cooling off.

At the same time, markets elsewhere in the country are speeding up. Although the New York metro area isn’t one of the fastest-moving markets, the share of homes for sale that were still on the market two months later dropped from 65% in April 2013 to 54% in April 2014. Edison-New Brunswick, NJ, and West Palm Beach are speeding up at a similar pace to New York, even though homes in these markets aren’t moving quickly enough to land those markets on the top 10 fastest-moving markets list.

In contrast, the slowest-moving markets are in the South (e.g. Richmond, Knoxville) and the Northeast (e.g. Hartford, Albany, New Haven). All but one of the 10 slowest-moving markets had year-over-year price increases below the national average of 10%.

America’s Top 10 Slowest-Moving Housing Markets

# U.S. Metro

Share of homes still for sale after being listed for at least two months, mid-April 2014

Share of homes still for sale after being listed for at least two months, mid-April 2013

Difference in share still for sale, 2014 vs 2013

Asking prices, Y-o-Y % Change, March 2014

1 Richmond, VA

72%

61%

11%

3.6%

2 Hartford, CT

71%

67%

4%

-1.2%

3 Albany, NY

70%

70%

0%

-1.5%

4 New Haven, CT

70%

68%

3%

-0.3%

5 Long Island, NY

70%

68%

2%

4.8%

6 Knoxville, TN

68%

64%

4%

6.2%

7 Springfield, MA

67%

66%

1%

3.0%

8 Columbia, SC

67%

67%

0%

8.0%

9 Birmingham, AL

66%

67%

0%

16.7%

10 Greenville, SC

66%

66%

0%

6.1%

Note: Among the 100 largest U.S. metros. The two-month shares and the difference are rounded to the nearest percentage point, and the difference was calculated before rounding; therefore, the rounded difference might not equal the difference between the rounded shares. To download the findings for the 100 largest U.S. metros, click here.

Why do some markets move faster than others? The tables above show that faster-moving markets have had bigger price increases: these fast-moving markets are sellers’ markets where homes don’t stay on the market for long. The scatterplot shows that markets with bigger price increases tend to move faster (though not always):

FastestMovingMarkets_HomePrices_Scatterplot

But fast-moving markets are different in other ways, too. They tend to be more expensive to begin with; in other words, they have had both higher price levels AND bigger price increases in the past year. Expensive markets – including many in California – have a perennially tight housing supply because of limited construction, so homes don’t stay on the market for long.

Finally, foreclosures are affecting the speed of the market, particularly at the low end. In metros that still have a significant foreclosure inventory– which are concentrated in states with slower “judicial” foreclosure laws – the low-priced tier moves more slowly than in metros with fewer foreclosures. Since many foreclosures tend to be lower-priced, fewer foreclosures mean a smaller supply of lower-priced homes, so homes in the low tier don’t stay on the market as long. The fast-moving low tier is yet another hurdle for first-time homebuyers: not only do potential first-timers face declining affordability and a slow jobs recovery, but the homes they can afford aren’t waiting on the market for them.

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Home Prices and Population Growth: Cities vs. Suburbs

From some angles, it looks like the housing recovery has brought an urban resurgence: for instance, the most urban counties are growing faster now than during the housing bubble, and many dense cities are having a boom in apartment construction. However, the most recent data show that asking prices in urban neighborhoods are rising only slightly faster than in the suburbs, and the suburbs actually have higher population growth.

 The Trulia Price Monitor and the Trulia Rent Monitor are the earliest leading indicators of how asking prices and rents are trending nationally and locally. They adjust for the changing mix of listed homes and therefore show what’s really happening to asking prices and rents. Because asking prices lead sales prices by approximately two or more months, the Monitors reveal trends before other price indexes do. With that, here’s the scoop on where prices and rents are headed (see note #1 below).

Asking Prices Continue to Rise as Spring House Hunting Season Begins
Despite declining investor purchases and more inventory coming onto the market, asking home prices continued to rise at the start of the spring housing season. Month-over-month, asking prices rose 1.2% nationally in March 2014, seasonally adjusted. Quarter-over-quarter, asking prices rose 2.9% in March 2014, seasonally adjusted, reflecting three straight months of solid month-over-month gains.

Year-over-year, asking prices are up 10% nationally and up in 97 of the 100 largest metros. Albany, NY, Hartford, CT, and New Haven, CT, are the only three large metros where prices fell year-over-year, albeit slightly.

TruliaPriceMonitor_LineChart_Mar2014

March 2014 Trulia Price Monitor Summary

 

% change in asking prices

# of 100 largest metros with asking-price increases

% change in asking prices, excluding foreclosures

Month-over-month,
seasonally adjusted

1.2%

Not reported

1.1%

Quarter-over-quarter,
seasonally adjusted

2.9%

97

2.8%

Year-over-year

10.0%

97

9.5%

*Data from previous months are revised each month, so data being reported now for previous months might differ from previously reported data.

… continue reading

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Housing Barometer: Recovery Staggers Forward Visualization Preview

Check out the full infographic

Housing Barometer: Recovery Staggers Forward

Trulia’s Housing Barometer shows that 4 of the 5 key housing indicators improved over the past year: prices, the delinquency+foreclosure rate, non-distressed home sales, and young-adult employment are all in better shape than one year ago. However, despite improvement, young-adult employment still isn’t halfway back to normal; neither is the fifth indicator, construction starts.

How We Track This Uneven Recovery
Since February 2012, Trulia’s Housing Barometer has charted how quickly the housing market is moving back to “normal” based on multiple indicators. Because the recovery is uneven, with some housing activities improving faster than others, our Barometer highlights five measures:

  1. New construction starts (Census)
  2. Existing home sales, excluding distressed sales (National Association of Realtors, NAR)
  3. Delinquency + foreclosure rate (Black Knight, formerly LPS)
  4. The employment rate for 25-34 year-olds, a key age group for household formation and first-time homeownership (Bureau of Labor Statistics, BLS)
  5. Home-price levels relative to fundamentals (Trulia Bubble Watch)

The first four measures are reported monthly; to reduce volatility, we use three-month moving averages for these measures. The fifth, prices from our Bubble Watch, is a quarterly report. For each indicator, we compare the latest available data to (1) its worst reading for that indicator during the housing bust and (2) its pre-bubble “normal” level.

Housing-Barometer_Q12014

… continue reading

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Bubble Watch: Local Worries, National Calm

Although national home prices rose significantly in the past two years, they’re still 5% undervalued compared with long-term fundamentals. Home prices today look overvalued in 19 of the 100 largest metros, including 8 of the 11 large California metros.

Trulia’s Bubble Watch reveals whether home prices are overvalued or undervalued relative to their fundamental value by comparing prices today with historical prices, incomes, and rents. The more prices are overvalued relative to fundamentals, the closer we are to a housing bubble – and the bigger the risk of a future price crash.

Recent price changes, by themselves, cannot tell us whether this is a housing bubble; neither can a simple comparison of nominal price levels today to where they were in the past. Asking prices in Las Vegas, for instance, are up almost 60% from their lowest point during the bust, and asking prices in Pittsburgh and Dallas are now above their 2006 highs. But none of those facts takes fundamentals into account, so none can tell us whether those local markets are in a housing bubble.

Bubble watching is as much art as it is science because there’s no definitive measure of fundamental value. To try to put numbers on it, we look at the price-to-income ratio, the price-to-rent ratio, and prices relative to their long-term trends using multiple data sources, including the Trulia Price Monitor as a leading indicator of where home prices are heading. We then combine these various measures of fundamental value rather than relying on a single factor, because no one measure is perfect. Trulia’s first Bubble Watch report, from May 2013, explains our methodology in detail. Here’s what we found.

Bubbles Haven’t Broken the Surface Nationally
We estimate that home prices nationally are 5% undervalued in the first quarter of 2014 (2014 Q1), which means we’re not in a nationwide housing bubble. Remember that prices reached a high of 39% overvalued in 2006 Q1, then dropped to being 15% undervalued in 2011 Q4. One quarter ago (2013 Q4) prices looked 6% undervalued, and one year ago (2013 Q1) prices looked 10% undervalued (see note at end of post about the trend over time). This chart shows how far current prices are from a bubble:

bubblewatch

Local Warning Signs Bubbling Up, Especially Along California Coast
Turning from the national view to the local scene, home prices are above their fundamental value in 19 of the 100 largest metros. Three of the five most overvalued housing markets are in southern California: Orange County, Los Angeles, and Riverside-San Bernardino; these three markets have also had sharp price increases over the past year. Looking across the whole state, prices in 8 of the 11 large California metros are overvalued now; the 3 exceptions are the undervalued inland metros of Fresno, Bakersfield, and Sacramento.

Top 10 Metros Where Home Prices Are Most Overvalued

# U.S. Metro

Home prices relative to fundamentals, 2014 Q1

Year-over-year change in asking prices, February 2014

1 Orange County, CA

+16%

16.9%

2 Los Angeles, CA

+13%

18.9%

3 Honolulu, HI

+13%

12.1%

4 Austin, TX

+11%

11.3%

5 Riverside-San Bernardino, CA

+10%

24.1%

6 San Jose, CA

+8%

14.5%

7 San Francisco, CA

+7%

16.5%

8 Miami, FL

+6%

12.4%

9 Fort Lauderdale, FL

+6%

18.0%

10 Ventura County, CA

+6%

17.1%

Note: positive numbers indicate overvalued prices; negative numbers indicate undervalued, among the 100 largest metros. Click here to see the price valuation for all 100 metros: Excel or PDF.

Prices are most undervalued today in several Midwest and Connecticut markets. Eight of the 10 most undervalued housing markets had single-digit price gains or slight price drops in the past year, though Detroit and Chicago had double-digit price gains. … continue reading

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How Special Are Million-Dollar Listings?

Homes that cost a million dollars or more are rare in most of the country but make up more than 20% of the for-sale market in San Francisco, Fairfield County, and San Jose. The typical million-dollar listing in New York is smaller than the average American home.

Close your eyes and imagine a million-dollar home. Depending on where you live, you might be picturing the modest three-bedroom down the street, or you might be thinking of a sprawling mansion. You might even be drawing a blank if you live in a market where million-dollar homes are almost unheard of.  While a home listed for a million dollars might cause just a shrug in some parts of California and New York, million-dollar homes are few and far between once you get more than a couple hours’ drive from an ocean. To see what a million bucks buys across the country, we calculated the share of for-sale listings on Trulia priced at or above $1,000,000 in each of the 100 largest metros, as well as the typical size of homes priced at or near the million-dollar mark, all as of March 3, 2014.

MillionDollarHomesComparison

In Most Metros, Million-Dollar Homes Represent Just a Sliver of the Market
Nothing drives home the huge differences in housing costs across the country more than how rare or common million-dollar homes are. Million-dollar homes account for more than 20% of listings in New York, neighboring Fairfield County, CT, and Long Island; in Orange County and Ventura County, on the southern California coast; and in San Francisco and San Jose. In fact, million-dollar homes make up close to half the San Francisco market, at 44%.

# U.S. Metro Share of for-sale listings priced at or above $1,000,000
1 San Francisco, CA

43.5%

2 Fairfield County, CT

29.7%

3 San Jose, CA

25.7%

4 Orange County, CA

24.4%

5 Ventura County, CA

21.5%

6 New York, NY-NJ

20.8%

7 Long Island, NY

20.5%

8 Honolulu, HI

19.8%

9 Los Angeles, CA

18.4%

10 San Diego, CA

18.0%

For the share of listings priced at or above $1,000,000 in all of the 100 largest metros, click here.

But in 68 of the 100 largest metros, million-dollar homes make up less than 5% of the for-sale market, including the major metros of Philadelphia, Chicago, Dallas, Houston, and Atlanta. Furthermore, million-dollar homes are less than 2% of the market in 44 of the 100 largest metros. … continue reading

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