Real Estate Data for the Rest of Us

articles about “Home Prices

Where “Back to School” Means Private School

One way or another, good schools cost money. Private school tuition can easily exceed monthly housing costs, but home prices in top-rated public school districts are 32% above the local average.

Jed Kolko, Chief Economist
August 13, 2014

More than two-thirds of adults with children under 12 say that the neighborhood school district is among the most important considerations when choosing a home, according to a June 2013 Trulia survey. However, some parents factor schools into their housing choices differently. Nationally, 10% of school kids grades 1-12 attend private schools, and in some neighborhoods, the majority of kids go to private school.

In recognition of the back-to-school season, we analyzed where private school enrollment is high and low across the U.S. These geographic differences reveal why parents choose private or public schools for their kids.

For parents looking to move, knowing whether neighborhood kids go to private or public schools can help them decide where to live. First, a neighborhood’s level of private school enrollment signals whether you too might want to send your kids to private school if you lived there. Second, even if you plan to send your kids to public school, the share of neighborhood children in private schools affects whether most of the neighborhood kids will be at school with them.

Who Sends Their Kids to Private School
Let’s start with two essential facts about private schools, which explain a lot about who goes to private school:

  • Essential fact #1: Just 20% of private school students attend non-sectarian schools; the other 80% are in religiously-affiliated private schools, of which half are Catholic.
  • Essential fact #2: The cost of private schools is high, but varies widely. On average, tuition is almost $11,000, not counting discounts or scholarships. This ranges from $7,000 for Catholic schools and $9,000 for other religious schools to $22,000 for non-sectarian private schools. Tuition tops out at about $40,000 for the most expensive prep schools.

Given the high cost, kids from richer families are far more likely to go to private school than kids from poorer families. Only 6% of kids in households with incomes under $50,000 attend private schools, compared with 26% of kids in households with incomes of $200,000 or more.


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Can Any Local Market Predict National Home-Price Trends?

Pay extra attention to Minneapolis-St. Paul home prices – they are the best local indicator of what will happen to national home prices one year later. Home price trends in Texas, however, are a terrible guide to what’s in store for the rest of the country.

Wouldn’t it be nice if there were a local housing market that we could use as the nation’s crystal ball? If one market regularly ran ahead of the national trends, we could pay extra attention to what’s happening there in order to know what the rest of the country should expect. During the housing bubble and bust over the last decade, there were clearly markets – like Las Vegas – that had more extreme swings in prices than others did, but being more extreme isn’t the same as being first.

To see which markets – if any – tend to get ahead of the national trend, we looked at home-price changes between 1980 and 2014 in the 100 largest U.S. metros and the U.S. overall, using the Federal Housing Finance Agency (FHFA) home-price index. Our crystal-ball score, calculated for each metro individually, is the correlation between the year-over-year home price change in that metro with the year-over-year home price change for the U.S. overall one year later. In other words, we’re measuring how closely the ups and downs in a local market’s home prices match the national ups and downs one year later. Remember that correlations range from 1 to -1: the higher the correlation, the stronger the forecast. A negative correlation means that a better year for a metro’s home prices is typically followed by a worse year for the nation’s home prices (and vice versa).

The Crystal Ball Award Goes to the Twin Cities
Among the 100 largest metros, the housing market with the highest crystal-ball score is Minneapolis-St. Paul. Other markets that are relatively good bellwethers include San Diego, Ventura County, and Sacramento in California; West Palm Beach and three other Florida metros; Washington, DC; and St. Louis. In general, these markets had a more severe housing bust last decade and faster historical price growth over the past three decades than other markets. But it’s an eclectic bunch, with St. Louis, Washington, and Minneapolis-St. Paul having had a milder bust than the markets in California and Florida.

# U.S. Metro Crystal-ball score: Correlation of local price change with following year’s national price change
1 Minneapolis-St. Paul, MN-WI 0.79
2 San Diego, CA 0.76
3 West Palm Beach, FL 0.76
4 Cape Coral-Fort Myers, FL 0.73
5 Ventura County, CA 0.73
6 Washington, DC-VA-MD-WV 0.72
7 Sacramento, CA 0.72
8 Palm Bay-Melbourne-Titusville, FL 0.71
9 North Port-Bradenton-Sarasota, FL 0.71
10 St. Louis, MO-IL 0.71

This graph shows what a 0.79 correlation actually looks like. Year-over-year home prices in Minneapolis – St. Paul tend to look like national changes but a little bit ahead:

AheadofCurve … 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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Whipsaw Week Turns Out Strong for Housing Data

The short holiday week isn’t halfway done, but three new data reports have given new signals about the housing recovery.

Jed Kolko, Chief Economist
November 26, 2013

Yesterday NAR reported the fifth straight monthly drop in pending home sales. Today, however, Census reported a big jump in new building permits, to the highest level in 5 years, and Case-Shiller reported the largest month-over-month increase in home prices since April. What should we make of these mixed signals?

Sales
•Some of the weakness in the October pending home sales data was probably due to the government shutdown. Watch next month’s data closely for signs of a rebound.

•The October existing home sales data – released last week – were also down, but the overall number masked a key trend: the continued shift from distressed (foreclosure and short sales) to conventional sales. While overall existing sales rose just 6% year-over-year, conventional sales were up 22% year-over-year.

•The shift from distressed to conventional sales is a key part of the housing recovery. Sales data that combine distressed and conventional sales – like pending sales index and the existing home sales index – understate the recovery in home sales.

Permits
•Today’s October 2013 permit data showed multifamily permitting the highest in 5 years, with single-family permits just shy of their 5-year high. This was a strong report for construction. The housing starts data for September and October won’t be released until December 18, however.

•These solid permits data are not just due to monthly volatility. The three-month average for total building permits (i.e., Aug-Oct) is also at a 5-year high.

•The construction recovery is uneven. Permits are now above local norms in metro Boston, NYC, San Francisco, Austin, Houston, Oklahoma City, and San Jose. However, permits are still way below local norms in Atlanta, Phoenix, Las Vegas, Sacramento, Chicago, and Detroit.

Prices
•Today’s Case-Shiller report for September showed the biggest month-over-month increase since April for the 20-metro index. The more reliable national quarterly report showed Q3 prices rising slightly faster than in Q2 – and the second-highest quarterly gain since 2005 Q4.

•Price gains are clearly slowing in California. In the rest of the country, though, prices are accelerating in some markets and slowing in others.

•Case-Shiller data show what was happening in the market several months ago. The Trulia Price Monitor shows the current trend: October asking prices slowed slightly, but prices are still rising at a fast pace. We’ll report November’s Price and Rent Monitors next Wednesday, December 4.

Overall, this has been a strong 24 hours for housing data. The broader trend in sales data is better than the pending home sales report appears because of (1) the shift from distressed to conventional sales and (2) some of the drop is probably temporary impact of the shutdown.

Price data show healthy slowing from unsustainable levels earlier this year but no signs of a crash. The best news for the housing recovery, though, is the strong permits data. Construction has been the laggard of the recovery, with starts still 40% below normal (as of August), held back by high vacancy rates and slow household formation. The jump in permits points to more construction activity in the next month or two and more inventory coming onto the market next year.

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Best Places to Live to Avoid Natural Disasters

In Ohio and upstate New York, you’ll find metros at lower risk for hurricanes, floods, tornadoes, wildfires, and earthquakes. And – as a bonus – it’ll cost you much less to live there.

Jed Kolko, Chief Economist
August 15, 2013

Today, Trulia added three new hazard maps – for wildfires, hurricanes, and tornadoes – to the two hazard maps we introduced earlier this summer, featuring earthquakes and floods. As part of your home search, you can now check Trulia to find whether the neighborhood of your dreams puts you in the eye, at the epicenter, or in the path of a natural disaster. You’ll see that California is high risk for wildfiresFlorida for hurricanesOklahoma for tornadoes, and more.

FL_Hurricane

LA_Wildfire

OK_Tornado

But where should you live to avoid nature’s wrath? No place is risk-free, of course. But using our new maps, we found 10 large metros that are relatively lower risk for all five types of major natural disaster

Where to Hide from Mother Nature’s Fury
To find the metros that best dodge natural disasters, we used the data that powers our hazard maps and calculated the average risk within each metro area for each of the five types of natural disasters. Most metros were high risk for at least one of the five natural disasters, even though no metro area is high risk for everything. Earthquakes and wildfires tend to go hand-in-hand, with California and other parts of the West highly susceptible for both. Hurricanes and flooding also tend to strike the same places, particularly in Florida and along the Gulf Coast, while tornadoes affect much of the south-central U.S. What parts of the country are left? Not the cities in the coastal Northeast, which – as we all know after Hurricane Sandy – face hurricane and flood risk. Instead, the metros at medium-to-low risk for all five disasters span Ohio (Cleveland, Akron, and Dayton), upstate New York (Syracuse and Buffalo), and other parts of the Northeast and Midwest, away from the coasts.

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