“It’s been more than seven years since the housing market last experienced the increase that we saw in May, with indications that the summer months will continue to see significant gains. As we approach the half-way point of 2013, home prices continue to respond positively to the reduction in home inventory thus far,” according to Mark Fleming, Chief Economist for CoreLogic, a leading property information and analytics firm.
Indeed by CoreLogic’s HPI calculations, 97 of the largest metropolitan areas in the country posted year over year increases with 33 metro areas showing double digit increases. For May, Nevada posted the highest year-over-year home price appreciation at 26%, with California 2nd at 20.2%, Arizona coming in at 16.9%, Hawaii at 16.1% and Oregon rounding out the top 5 with 15.5%. Just two states posted year-over-year price declines, Alabama at -0.1% and Delaware at -0.6%. At 18%, the Riverside/San Bernardino/Ontario metropolitan area was 3rd in the nation for appreciation, just behind Phoenix at 18.3% and LA/Long Beach at 19.8%.
Whether by a little or a lot, it would appear the housing market is finally out of the doldrums. We can discuss the myriad reasons this has come about and we can debate whether it is sustainable and for how long, but for the time being it’s upon us.
Certainly in Southwest California our cities are performing well with the region showing a 22% median price increase over June of 2012. In fact 19% of that increase has come just since January. If the 2nd half of the year is anything like the first, we’re in trouble. We’ve posted month over month gains every month this year and our June median of $325,088 for the region is the highest we’ve recorded since March 2008.
90% of our active inventory is now standard sale homes, an almost complete reversal from 2010 when 92% of our inventory was bank-owned homes. Our inventory across the region climbed slightly in June from 1.1 months to 1.3 months – which isn’t a big help, and we’re still selling nearly 2 homes for every new property listed. Homes are selling at asking price or higher for the most part, and lowball investors are finding there just aren’t any homes to be had.
If you were prescient enough to buy a home in April of 2009, when our prices troughed at $210,317, you’ve seen your property value appreciate 35%. That appreciation in value is one reason foreclosure filings are down nearly 55% from a year ago and why the inventory of bank owned homes is down some 35% across the state.
Unfortunately if you bought earlier, like when we peaked in March 2007 at $508,559, you’re still 36% underwater but getting better. At $416,271, Temecula has made back slightly more than half their equity loss ($575,935 in 6/06 – $263,118 in 1/09) and the other cities are moving up as well.
How long can this drive continue? Well, there is still significant pent-up demand, interest rates, though climbing, are still attractively low and a lack of inventory is driving a seller’s market. But national uncertainty over tax reform, healthcare and other issues are serving to keep the jobs market from flourishing and until employment improves, we won’t see the full potential of this housing market. In fact, could see some dampening of demand if economic concerns linger.
Gene Wunderlich is the Government Affairs Director for Southwest Riverside County Association of Realtors. If you have questions on the market please contact me at GAD@srcar.org or to keep up with the latest legislative and real estate trends go to http://gadblog.srcar.org/