Pro Teck Valuation Services' May HomeValueForecast.com Update has some good news for many metro areas hardest hit by price declines may be recovering due to increasing home sales and reduced inventories of homes, including Midwestern Rust Belt markets like Detroit, Peoria, and Troy, MI.
"One of the most important developments in the past year for the residential real estate market has been the significant decline in the inventory of homes for sale. Nationally, the number of homes currently listed are down 21 percent from a year ago," said Tom O'Grady, president and CEO of Pro Teck Valuation Services. "This month's HomeValueForecast.com shows that for a number of widely followed markets, the declines in housing stock are even greater. It's noteworthy that Phoenix, Miami, Atlanta, Orlando, and Riverside-San Bernardino, some of the hardest hit metros with regard to price declines since the market peak in 2006, are topping the list."
O'Grady also reported that nationally, the months of remaining inventory (similar to months' supply) is 6.3 months and is at the lowest level since 2006. This indicates that the overall U.S. market is stabilizing according to the monthly update. "Also, the months of housing inventory (MRI) remaining nationally was at or below the 5 month threshold throughout the 2002 to 2005 period when nationwide home prices were experiencing their largest gains," he said.
This month's HomeValueForecast.com included a listing of the 10 best and 10 worst performing metros as ranked by our market condition ranking model. The rankings are run for the single family home markets in the top 200 CBSAs on a monthly basis to highlight the best and worst metros with regard to a number of leading real estate market indicators, including: number of active listings, average listing price, number of sales, average active market time, average sold price, number of foreclosure sales, and number of new listings.
"In May, contrary to other housing reports, the "Rust Belt" states including Michigan and Illinois are seeing positive trends due to significant declines in active listing counts over the past year," said Michael Sklarz, Principal of Collateral Analytics and contributing author to HomeValueForecast.com. "This has led to most of these markets having balanced or tight markets based on their Months of Remaining Inventory values."
May's top CBSAs include:
Boise City, Nampa, ID
Warren-Troy-Farmington Hills, MI
West Palm Beach-Boca Rotan-Boynton Beach, FL
San Jose-Sunnyvale-Santa Clara, CA
Salt Lake City, UT
Cape Coral-Ft. Myers, FL
"On the flip side, a high percentage of the bottom-ranked metros are located in the Northeast. All of these locations have double digit Months of Remaining Inventory," added Sklarz. "Also, prices in these metros have held up much better since the market peak in 2005-2006 compared to the current top ranked markets. We believe that the relative rankings in the bottom ranked metros are not offering the same bargains – in terms of compelling prices and high rental yields – as the top ranked ones."
The bottom CBSAs for May were:
Virginia Beach-Norfolk-Newport News, VA-NC
New York-White Plains-Wayne, NY-NJ
Norwich-New London, CT
Hartford-West Hartford-East Hartford, CT
New Haven-Milford, CT
Highlighting HomeValueForecast.com's belief that all real estate trends are local, May's analysis also shows that the West Palm Beach-Boca Raton-Boynton Beach, FL CBSA, which is currently in the list of the Top 10 metros is no exception to have experience significant price declines since the market peak in 2005-2006. According to HomeValueForecast.com, the price peak in this metro occurred in the 4th quarter of 2005 and prices have since declined 52 percent.
"Like any market, bargain prices will bring out buyers – this is clearly happening in the West Palm Beach CBSA," added Sklarz. "Nearly all of the important market indicators are showing positive trends on a year-over-year basis including declining inventory, declining market times and less distressed sales activity to name a few."