The U.S. housing market is taking small steps toward a full recovery. But if you drill down to the metro level, you can see some giant leaps. That’s what we did for this latest report. We used data provided by Realtor.com (in their July Real Estate Data report) to create a list of metro-level housing markets where list prices are rising fastest. Here are the results.
Top-5 Housing Markets for List Price Increases
This ranking is based on year-over-year changes in median list prices, between July 2011 and July 2012. For the most part, these are markets with rapidly declining inventory and growing levels of demand. As such, sellers are able to ask more than they did a year ago. Median sales prices are rising in all of these markets, as well.
#1 – Santa Barbara, CA: +31.53%
The Santa Barbara housing market experienced the largest spike in median list prices (31.53%), from July 2011 to July of this year. Inventory reduction had a lot to do with it. The number of Santa Barbara real estate listings dropped by nearly 35% during the same period, while demand has remained strong. This puts upward pressure on home prices.
Over the coming months, we will probably see a significant rise in median sales prices in this metro area. The local unemployment rate has come down since the start of this year, putting more residents in a position to buy a home.
#2 – Phoenix-Mesa, AZ: +27.67
Over the last year or so, the number of Phoenix real estate listings on Realtor.com dropped by 34%. It’s no surprise home values are rising. For a metro area, Phoenix had the second-largest increase in its median list price.
It has earned other distinctions, as well. In the August release of the S&P/Case-Shiller Home Price Index, Phoenix had the largest year-over-year gain in home prices (nearly 14%) of any city within their 20-city index. According to a July report by Zillow, Phoenix was the #5 sellers’ market in the United States. This means homes are selling fast in the area, and often for the full asking price.
#3 – Boise, ID: +16.77
The Boise City-Nampa metro area has also experienced a major drop in for-sale inventory, down 21% year over year. This helps sellers justify their higher asking prices. But it’s not just the list prices that are going up. According to the National Association of Realtors, median sales prices rises rose by 22% over the last year or so.
The employment picture is also brightening. During the first half of this year, the unemployment rate within the Boise City-Nampa metro area dropped from 8.7% to 7% (source: Bureau of Labor Statistics). On average, homes were selling were selling 32.47% faster in the second quarter of this year, compared to the same time last year.
#4 – San Francisco, CA: +15.04%
What’s not to like about the San Francisco housing market (if you’re a homeowner)? Inventory is down, prices are strong, and demand is growing. List prices rose by 15% over the last year or so, and they will likely rise more as inventory shrinks.
Speaking of inventory, the number of homes listed for sale dropped by 40% from July 2011 to July of this year. This puts sellers firmly into the driver’s seat. In fact, Zillow recently ranked San Francisco as the #2 sellers’ market in the country.
According to the S&P/Case-Shiller Home Price Index, the Bay Area housing market has seen consistent home-price gains for the last few months. We will likely see more of the same over the coming months.
#5 – San Jose, CA: +13.84%
Can you show me the way to San Jose? Because I’ve heard it’s the #1 sellers’ market in the country. The median list price in this metro-area housing market rose by nearly 14% during the period of note. But the real story is how this market has shifted over the last few years.
Like most of California, San Jose was a home buyer’s paradise just a couple of years ago. Today, according to Zillow, it is the strongest sellers’ markets in the United States (among the 50 largest metro areas). According to their data, homes in this market sell quickly and often for the full asking price.
For-sale listings on Realtor.com have dropped by 42% over the last year. June marked the twelfth consecutive month of increased home sales in the area. Also in June, median sales prices approached a four-year high. It’s all good news for Silicon Valley homeowners.
The housing market is changing rapidly right now, at both the national and metro levels. As such, this list may look very different six months from now. The trend of rising prices may even reach cities in the Northeast, where many housing markets are still lagging.