The U.S. housing market appears to be in recovery mode at present. Home prices are rising in most major cities, and even some of the hardest hit areas have stabilized. It’s giving sellers a newfound level of confidence. You can see it in their asking prices.
Realtor.com’s ‘Monthly Housing Summary’ looks at conditions in 146 metro areas in the U.S. Points of analysis include median list price, total number of listings, and median age of inventory.
Lately, the list of cities with asking-price increases has been growing. In the latest report, released on November 14, more than half of the cities had experienced an increase in the median list price (a.k.a., asking price).
Here are 16 cities were list prices have risen the most.
Housing Markets With Double-Digit Gains in List Price
List prices are not sale prices. Let’s clear that up right away. In real estate parlance, the list price is the asking price. It’s the amount the home has been listed for, not what is sold for. So a single list price, by itself, is not an indicator of market trends. But when we look at all list prices for a particular area, over a long period of time, we get a better understanding of what’s truly happening in the market.
Methodology: The 16 cities below all had double-digit gains in their median list price, between October 2011 to October 2012. These rankings are based on data provided by Realtor.com on November 14, 2012.
1. Sacramento, CA – (+31.01%)
Sacramento topped the list of metro areas with a year-over-year list price increase of 31%. It also had the highest monthly gain, by a country mile. From September to October of this year, the median list price shot up by more than 14%. No other major metro area came close to this number. In fact, out of 146 cities, Sacramento was the only one with a double-digit gain at the monthly level.
2. Santa Barbara, CA – (+27.03%)
Like many cities in California, Santa Barbara has experienced a major reduction in housing inventory over the last couple of years. The number of real estate listings on Realtor.com dropped by 27% from October 2011 to October 2012. New listings are selling nearly 20% faster than a year ago.
3. Phoenix, AZ – (25.57%)
Phoenix was one of the cities hit hardest by the housing market collapse. Prices there fell hard and fast in the early years of the crisis. That’s why the Phoenix real estate market hit bottom long before the rest of the country. Along with Washington, D.C., Phoenix was one of the first metro-level housing markets to turn the corner. It started in the summer of last year, and it hasn’t stopped since.
4. San Jose, CA – (20.49%)
San Jose has also experienced a massive decline in real estate listings. The number of homes listed for sale on Realtor.com fell by a whopping 44% over the last year or so. A few months back, it was ranked as the #1 sellers’ market in the nation by Zillow, and a ‘Top Turnaround Town’ by Realtor.com. Full story
5. Oakland, CA – (17.49%)
You may have noticed a pattern by now. Several patterns, actually. California dominates the list of cities where asking prices have risen the most. Most cities in California have also experienced significant declines in inventory. Oakland is a good example of this trend. For-sale inventory fell by nearly 60% in Oakland, from October 2011 to October 2012. That’s the third-largest decline of 146 metro areas. According to Zillow, home values in Oakland have risen by 4.6% over the last year.
6. San Francisco, CA – (17.37%)
What’s driving the real estate recovery in San Francisco? You name it. Inventory is down. Investors are snatching up homes left and right. Demand is growing among regular ‘live-in’ buyers. Prices are rising. And then there’s this: San Francisco currently leads the nation in foreclosure reduction, among major cities. According to RealtyTrac, foreclosure activity fell by 36% in the third quarter of this year, compared to the same period last year.
7. Fresno, CA – (14.64%)
Fresno was one of Realtor.com’s top ten ‘Turnaround Towns’ for the third quarter of this year. They cited a “quick-paced housing market moving more than 37.70% faster” than the same period last year. Inventory has fallen significantly at the same time, a common thread among California’s major cities. On the down side, the city’s unemployment rate is still well above the national average. This limits the pool of qualified home buyers. Prices have risen in spite of the local job market, not because of it.
8. Atlanta, GA – (13.14%)
Atlanta had an unusual pattern during the housing market collapse. Home prices fell slowly at first. But in the summer of 2011, as other markets were leveling off, Atlanta’s home values began free-falling a gain. It was one of the last major metropolitan areas to turn the corner (we called it in June 2012). Real estate listings have fallen by nearly 37% over the last year, in response to growing demand across the pricing spectrum. According to Zillow, the median sale price in Atlanta rose by 5.9% from October 2011 to October 2012.
9. Seattle, WA – (12.50%)
Seattle homes appear to be selling much more quickly today than a year ago. According to Realtor.com, the median age of inventory in the metro area has declined by 36% since last October. The median list price rose by more than 12% during the same 12-month period. Home prices in this metro area have risen for most of 2012. Seattle’s commercial real estate market is also faring well. According to the Urban Land Institute, Seattle is currently one of the top ten commercial markets in the country, from an investment and development standpoint.
10. Las Vegas, NV – (12.41%)
Las Vegas is another one of the ‘ground zero’ cities where the foreclosure crisis hit hardest. Home prices in Vegas started to plummet early, compared to the rest of the country. The free fall began toward the end of 2006 and didn’t stop until earlier this year. As prices began to level off and show stability, investors swooped in to snatch up the bargains in large numbers. The huge inventory surplus that has plagued the city for years is declining, slowly but surely. With more than 50% of homeowners still underwater, the Las Vegas housing market still has a long way to go. But at least things aren’t getting any worse.
11. Reno, NV – (11.67%)
As with Las Vegas, the other Nevada city on our list, Reno’s housing market has entered a period of modest recovery. But home prices fell a long way over the last few years, so there’s room for appreciation. That is what we are seeing at the moment. The median price of existing homes sold in Washoe County (home of Reno and Sparks) has risen by almost 30% since the beginning of this year. Inventory has come down at the same time. It’s giving homeowners the confidence to set higher asking prices, and the data to back it up.
12. Miami, FL – (11.60%)
Much of Florida’s housing market is still hurting. But there are some bright spots. Miami is one of them. Realtor.com ranked it as one of their top ten ‘Turnaround Towns’ for the third quarter, and with good reason. Inventory has declined significantly, and the median list price has climbed by double digits over the last year. According to the S&P/Case-Shiller Home Price Index, real estate values in Miami rose by 6.7% from August 2011 to August 2012.
13. Riverside-San Bernardino, CA — (11.11%)
According to DataQuick, a real estate tracking firm, the median sales price for Riverside, California rose by 10.5% from August 2011 to August 2012. The median for San Bernardino jumped by 12% during the same period. The number of homes for sale in the combined metro area has dropped by nearly 42% over the last year. It’s a familiar story, especially in California: Limited inventory, combined with burgeoning demand, is pushing values upward.
14. Washington, D.C. – (10.94%)
Like Phoenix (#3 above), Washington, D.C. was one of the first metro-level housing markets in the U.S. to enter a recovery phase. Home prices in the nation’s capital bottomed out in 2009, bounced for a bit, and then began to rise again. Inventory has come down as well, and homes are selling much faster than a year ago. For more on this market, check out this story in the Washington Post.
15. Bakersfield, CA – (10.72%)
Real estate inventory in Bakersfield has dropped by nearly 42% compared to this time last year. Construction of new homes is surging right now, in response to growing demand. Local builders expect new home permits to triple this year, compared to last year.
16. Austin, TX – (10.62%)
In a way, Austin shouldn’t be on the same list as these other cities. There wasn’t really a housing bubble in Texas. For instance, the Case-Shiller Home Price Index for Dallas is basically a flat line for the last seven years. The same can be said for Austin, the state capital. On the contrary, the other cities on this list experienced a marked boom and bust period. But this is not a list of housing markets with the most dramatic recoveries. It’s a list of cities with double-digit gains in asking price, over the last year. And for that reason alone, Austin clearly makes the list.
The California Factor
You’ve probably noticed a trend. Eight of the 16 cities on this list are located in California. It’s further evidence of a broad housing recovery that is sweeping the Golden State. A recent Bloomberg article said it best: “California, the state that led the U.S. into the housing boom and bust with some of the most reckless subprime mortgage lending, is now leading the way out.”