Home buyers in Buffalo, Oakland, and a handful of other metro areas could have the cards stacked in their favor when buying a house in 2014. We are seeing signs of a market shift in many parts of the country, with prices cooling and inventory growing. But it is much more pronounced in some cities than others.
We wanted to know which metro areas are on the way to becoming buyers’ markets, or at least shifting in that direction. So we used the Monthly Housing Summary provided by Realtor.com, and sorted the data accordingly. The results are presented below.
Notes: Realtor.com publishes a national housing report each month. It offers real estate data for 146 of the largest metropolitan statistical areas (MSAs) in the U.S. Among other things, it includes the total number of listings and the median age of inventory for each metro, based on Realtor.com’s property listings. The lists below are based on the housing market summary published on April 17, 2014, which contained data through the end of March 2014.
Step 1: Housing Markets With Biggest Annual Inventory Gains
First, we analyzed those 147 metro areas to see where housing inventory appears to be growing the most. Here are the 15 housing markets with the largest increases in total listings (homes listed for sale), from March 2013 – March 2014. The percentage shown beside each metro area indicates the year-over-year change in total number of listings, for the 12-month period mentioned above:
1. Stockton-Lodi, CA: +68.6%
2. Orange County, CA: +63.5%
3. Bakersfield, CA: +57.3%
4. Orlando, FL: +56.8%
5. Nashville, TN: +56.8%
6. Fresno, CA: +56.7%
7. Riverside-San Bernardino, CA: +53.5%
8. Rochester, NY: +53.3%
9. Buffalo, NY: +52.8%
10. Chattanooga, TN: +49.9%
11. Phoenix-Mesa, AZ: +47.1%
12. Oakland, CA: +47.1%
13. Minneapolis-St. Paul, MN: +46.3%
14. Melbourne-Titusville-Palm Bay, FL: +42.5%
15. Lakeland-Winter Haven, FL: +41.3%
Step 2: Housing Markets With Largest Increase in Inventory Age
Inventory growth alone does not indicate a shifting housing market. So we created another list, this time focusing on the length of time homes are listed for sale before either being sold or taken off the market. Here are the 15 metro areas where the “median age of inventory” increased the most, from March 2013 to March 2014. The percentage this time around shows the year-over-year change (increase) in the median number of days on market, for each of the housing markets listed:
1. Rochester, NY: +98.4%
2. Buffalo, NY: +90.9%
3. Oakland, CA: +80.0%
4. Memphis, TN: +68.4%
5. Orange County, CA: +67.6%
6. Charleston, WV: +64.8%
7. Nashville, TN: +62.1%
8. Peoria-Pekin, IL: +61.7%
9. Stockton-Lodi, CA: +60.0%
10. Allentown-Bethlehem-Easton, PA: +57.3%
11. Springfield, IL: +57.3%
12. Fresno, CA: +45.2%
13. Dallas, TX: +43.8%
14. Baton Rouge, LA: +41.0%
15. Charleston, SC: +38.8%
Step 3: Overlap (7 Metro Areas That Occurred on Both Lists)
Lastly, we cross-referenced to find out which metro areas appeared on both lists. The real estate markets shown below have had (A) significant gains in inventory and (B) significant increases in inventory age, over the last year or so. Translation: There are more homes for sale and they are taking longer to sell.
Here are seven housing markets that have shifted to favor buyers over sellers:
- Buffalo, NY — Forbes magazine recently named Buffalo ones of the most affordable cities in America. “With a median family income of $63,500 and a median home sales price of $100,000, home ownership is attainable for 88.5% of the local [Buffalo] population,” said the authors. Combined with the housing market shift indicated above, this is good news for anyone planning to buy a home in Buffalo.
- Fresno, CA — Like much of California, the Fresno real estate market suffered greatly during the national housing crisis. But things have improved notably since then, particularly during 2013. The percentage of distressed sales (foreclosures, short sales) has declined sharply over the last couple of years. This bodes well for the housing market as well as the broader local economy.
- Nashville, TN — Time magazine recently described Nashville as “The South’s Red-Hot Town,” noting that it was “the second-fastest-growing U.S. city for most of 2013 and the only one in the top four outside of oil-booming Texas.” All of that immigration may eventually favor sellers by increasing demand. But over the last year or so, the local housing market appears to have shifted toward buyers.
- Oakland, CA — Oakland is grappling with a crime problem so severe that some neighborhoods have taken matters into their own hands, hiring private security firms and starting neighborhood watch programs. Security firms. I’m not sure if that’s a perk for potential home buyers … or a red flag.
- Orange County, CA — Over the last three years or so, home prices in Orange County, Calif. rose so fast that they caused concerns of another bubble-and-bust cycle. But this was largely due to inventory shortages as investors snatched up properties right and left. Today, if you read between the lines you will see that this appreciation is unsustainable. Conditions over the last year or so suggest that some much-needed price cooling might be on the horizon.
- Rochester, NY — The Eastman Kodak Company has not done any favors for the local economy in Rochester. The downsizing company, which is headquartered in the city, has laid off more than 1,100 local workers over the last 18 months, according to the Rochester Business Journal. Home prices in and around the city have dipped slightly over the last year, according to Zillow. There are more homes on the market today, and they are taking longer to sell. All of this works to the home buyer’s advantage.
- Stockton-Lodi, CA — Home prices in the Stockton metro-area housing market have soared over the last couple of years. But the percentage of distressed sales has declined sharply, and inventory now seems to be growing year-over-year. Additionally, Stockton still has a high percentage of underwater homeowners. As a result of these and other factors, this real estate market could also begin to favor buyers over the coming months.
Disclaimer: Housing data is an imperfect science. This article does not suggest that these seven metro areas are true buyers’ markets. It merely shows that market conditions within these cities are shifting to favor home buyers, more so than they did in the past. (It’s all about the shift.) We make no claims or guarantees about future housing-market conditions within these or any other metro areas in the country.