I was recently reading about housing trends heading into 2013 and came across a very good, informational article from 12/19/12 realtor.com/blogs. It talks about the year that was in real estate and what lies ahead for 2013. Portland and Houston are among their favorites to rebound in the coming year, and I tend to agree. Enjoy the read…
Portland Oregon Poised For 2013 Real Estate Rebound
What do Portland and Houston have in common? At first glance, not much. They are very different cities in different regions with different local economies. Yet they share one commonality: After going through the recession and the housing crisis, those real estate markets are improving and are poised for recovery in 2013.
Portland
Portland, Oregon is showing significant signs of growth and recovery. Inventories in the Portland market are down 22.62 percent from last November and prices have risen 5.49 percent in the past 12 months. Unemployment in Portland was at 7.5 percent in October, below the state rate of 8.1 percent and the national rate of 7.9 percent.
The Portland residential real estate market peaked in August 2007 with a median sale price of $302,000. Prices fell 30 percent from that peak before reaching the current $269,000 median list price. Inventories are down 22.62 percent from last year, ranking Portland 28th in the nation in terms of its inventory decline.
Houston
During the housing boom years, Houston, and Texas in general, did not experience the soaring prices and overbuilding that saturated other markets and helped to drag down values. With inventories down 22.36 percent from 2011, prices up 3.4 percent on the year and median age of inventory at only 73 days, Houston is ready for recovery in 2013.
Foreclosures are also low; Harris County (where Houston is located) is seeing the lowest number of foreclosures since the recession began in 2008. Since Houston has a low inventory of available homes, there will be more competition among prospective buyers to purchase homes, meaning sales prices will increase, according to economists from the Texas A&M Real Estate Center.
Today, the future of Houston’s housing market comes down to jobs, and with its energy base, the Houston market is anticipating success. October unemployment is down to 6.2 percent from 7.7 percent in September and is well below that national level of 7.9 percent.
National Summary:
As 2012 comes to a close, there are signs that the housing market may have reached a crucial junction. The gains in the national median list price that occurred earlier in the year have largely been erased, with the median list price in November ($189,900) now at the level observed a year ago. At the same time, both the size and the age of the inventory continue to be sharply down on a year-over-year basis. Flat list prices—a leading indicator of future house price trends—most likely signal a slowdown in the recent rate of house price appreciation. At the same time, historically low inventories suggest that significant price concessions on the part of home sellers may be coming to an end. How these potentially offsetting trends play out in the housing market will depend on a variety of factors, including potential buyers’ optimism regarding the continued strength of the overall economy.
National – The total U.S. for-sale inventory of single family homes, condos, townhomes and co-ops (SFH/CTHCOPS) dropped to its lowest point since 2007, with 1.674 million units for sale in November, down 16.87 percent compared to a year ago and more than 45 percent below its peak of 3.1 million units in September 2007, when Realtor.com began monitoring these markets. The median age of the inventory was also down by 11.4 percent on a year-over-year basis. However, the median list price in November ($189,900) was the same as it was a year ago despite the significant gains observed earlier in the year.
Key Market Indicators for November 2012
November 2012
Year-over-Year % Change
Month-over-Month % Change
Number of Listings
1,674,412
-16.87%
-4.69%
Median Age of Inventory
101
-11.40%
4.12%
Median List Price
$189,900
0.00%
0.00%
Local Markets – National data masks pronounced regional differences in the strength of the housing market. Patterns that have been observed throughout the year continued to run their course, as markets that were once the epicenter of the housing crisis continued to strengthen while markets in more industrialized parts of the Midwest and Northeast continued to fall behind. California, Arizona, and Washington markets are ending the year with dramatic declines in their number of for-sale properties, coupled with significant year-over-year list price increases of 10 percent of more. However, markets such as Peoria, Ill.; Fort Wayne, Ind.; and Toledo, Ohio—areas that never experienced a rapid run-up in their housing prices—have experienced median list prices that are down by as much as 10 percent on an annual basis and significantly smaller year-over-year reductions in their for-sale inventories.
On a year-over-year basis, the for-sale inventory declined in all but five of the 146 markets covered by Realtor.com, while list prices increased in 70 markets, held steady in 30 markets and declined in 46 markets. The number of markets experiencing year-over-year list price declines has increased steadily in recent months, underscoring the continued fragility of many housing markets.
National Perspective
Median List Prices – The nationwide median list price for SFH/CTHCOPS ($189,900) held steady in November and is essentially unchanged from a year ago. While the gains that accompanied the onset of the 2012 spring home buying season have disappeared at the national level, record-low inventories may prevent a further erosion of list prices in 2013.
For Sale Inventories – The national for-sale inventory of SFH/CTHCOPS in November (1,674,412) decreased (4.69 percent) from what it was in October and was down by 16.87 percent on an annual basis. The large year-over-year decline in inventory is a positive sign that the market may have worked through much of its excess inventory, which should help to bolster housing prices and potentially set the stage for additional growth.
Median Age of Inventory — The median age of inventory of for-sale listings was 101 days in November, up by 4.12 percent from October, but 11.40 percent below the median age a year ago (November 2011). While the median age of the inventory is highly seasonal, the year-over-year decline is consistent with other data that shows a general tightening of market conditions throughout the year.
Local Market Variations
For Sale Inventories (y/y) – For-sale inventories of SFH/CTHCOPS in November declined on an annual basis in all but five of the 146 MSAs monitored by Realtor.com, with for-sale inventory dropping by 20 percent or more in 44 of the 146 markets covered. Although the rate of decline has moderated somewhat in recent months, many areas continue to see dramatic declines in their for-sale inventories compared to a year ago.
The 10 MSAs with the largest year-over-year declines in their for-sale inventories in November 2012 are listed below. Nine out of 10 of these markets are in California, with declines that range from 37 percent to 65 percent. Seattle, Wash., also registered a year-over-year decline in its for-sale inventory of -43%.
Only five areas experienced a year-over-year increase in their for-sale inventories— Shreveport, La. (14.16 percent); Philadelphia (6.94 percent); the Philadelphia metro area in New Jersey (1.84 percent); Cedar Rapids, Iowa (1.44 percent); and Reading, Pa. (0.14 percent). Increasing inventories in these markets are consistent with other indicators of continued weaknesses in both their housing markets and local economies.
Median List Prices (y/y) – On a year-over-year basis, November median list prices were up by 1 percent or more in 70 of 146 MSAs, and up by 5 percent or more in 42 MSAs. Median list prices were down by 1 percent or more in 46 markets, while 14 experienced a decline of more than 5 percent. The remaining 30 markets have not experienced significant changes in median list prices compared to a year ago.
During the past few months, the number of markets experiencing year-over-year price declines has steadily increased, while the number experiencing list price increases has steadily declined. In fact, compared to a year ago, a higher number of markets are ending the year with a year-over-year price decline (46 in November 2012 vs. 31 in November 2011) and a lower number of markets have a year-over-year price increase (70 in November 2012 vs. 94 in November 2011).
Median List Prices – Largest y/y Increases – California markets continue to dominate the list of areas experiencing the largest year-over-year increases in their median list prices. In addition, Phoenix, Atlanta, and Seattle are among the top performers. The 10 markets with the largest year-over-year list price increases are shown below. All of these markets have experienced year-over-year declines in their for-sale inventories of 18 percent or more, while half of these markets had inventory declines of 40 percent or more.
Median List Price
10 MSAs with the Greatest Year-over-Year List Price Increases
November 2012 vs. November 2011
Sacramento, CA
35.29%
Santa Barbara-Santa Maria-Lompoc, CA
29.62%
San Francisco, CA
22.88%
San Jose, CA
21.91%
Phoenix-Mesa, AZ
21.37%
Oakland, CA
20.93%
Fresno, CA
18.19%
Atlanta, GA
14.72%
Riverside-San Bernardino, CA
13.31%
Punta Gorda, FL
13.13%
Median List Prices – Largest y/y Declines – For more than a year, older industrialized markets that never experienced the rapid run-up in prices that led up to the housing crisis have been registering some of the largest list price declines. This pattern continued in November. The 10 markets with the largest list price declines are shown below. While Jersey City, N.J., and Chicago had year-over-year inventory declines of 33 percent and 21 percent, respectively, most of the remaining areas experienced inventory declines that were well below the national average (17 percent decline).
Median List Price
10 MSAs with the Greatest Year-over-Year List Price Declines
November 2012 vs. November 2011
Peoria-Pekin, IL
-10.72%
Toledo, OH
-9.09%
Fort Wayne, IN
-9.09%
Charleston, WV
-8.53%
Reading, PA
-7.84%
Dayton-Springfield, OH
-7.18%
Chicago, IL
-6.72%
Philadelphia, PA-NJ(NJ)
-6.56%
Jersey City, NJ
-6.35%
Columbia, MO
-5.94%
Median Age of Inventory (y/y) – The median age of the inventory continued to be relatively high in the coastal areas of the Carolinas and in other vacation destinations such as Santa Fe, N.M., and Ashville, N.C. Reading, Pa. The Philadelphia metro area in New Jersey and Portland, Maine, also had inventories that had been on the market for more than 120 days.
Median Age of Inventory
10 MSAs with the Longest Median Days on Market
November 2012 vs. November 2011
South-SC-RSA
163
Myrtle Beach, SC
148
Reading, PA
147
Wilmington, NC
146
Santa Fe, NM
145
Asheville, NC
134
Philadelphia, PA-NJ(NJ)
131
Portland, ME
131
Tallahassee, FL
129
Trenton, NJ
123
Albany-Schenectady-Troy, NY
123
Charleston-North Charleston, SC
123
California markets continue to register among those with the lowest time on market compared to other areas of the country. The median age of inventory was also relatively low in Denver and Phoenix.