CoreLogic, a financial information company, released the results of their latest Home Price Index (HPI) report on Tuesday. It brought good news for homeowners across Southern California and a handful of other metro areas, where home prices have risen by more than 10% year over year.
According to the report, prices rose in 99 of the 100 largest metropolitan areas in the U.S. Nationally, home values rose by 12.4% in July, compared to the same month last year. CoreLogic also singled out the ten metro-level housing markets with the most appreciation.
Top 10 Housing Markets for Year-Over-Year Price Gains
This list shows how single-family home prices changed from July 2012 to July 2013. These rankings are based on a repeat-sales index that tracks increases and decreases in sales prices and includes distressed sales.
1. Los Angeles-Long Beach-Glendale, CA +22.62%
The Southland housing market includes the cities of Los Angeles, Long Beach and Glendale, Calif. It’s also one of the hottest real estate markets in the country right now, with home prices rising more than 22% annually, according to CoreLogic.
It’s so hot, in fact, that some analysts are starting to use the “bubble” word. According to Jed Kolko, chief economist for the real estate website Trulia, Los Angeles is one of only two metropolitan areas in the U.S. where home prices are more than 10% overvalued (Orange County is the other).
To be clear, home prices in the Los Angeles area are still well below the 2006 peak that occurred during the housing bubble. So there’s no quantifiable cause for concern — yet.
2. Riverside-San Bernardino-Ontario, CA +22.53%
The Inland Empire housing market (which includes the cities of Riverside, San Bernardino and Ontario, Calif.) has also seen major home-price gains over the last year. Prices jumped 22.53% from July 2012 to July 2013, according to CoreLogic’s HPI report.
San Diego-based DataQuick also reports strong numbers for this region. The median sale price for the Riverside housing market rose nearly 26% in July, compared to the same month last year. San Bernardino’s MSP climbed 24.2% over the same period.
Just don’t expect these trends to continue. The number of homes for sale across this metro area is rising sharply. One of the reasons we are seeing such significant price gains in the Riverside and San Bernardino real estate markets (and across much of California) is because inventory plummeted over the last couple of years. But now it’s rising again. This will likely have a cooling effect on local home prices.
3. Phoenix-Mesa-Glendale, AZ +18.10%
Much can be said about the Phoenix real estate market. It was one of the cities hit hardest by the housing crisis. Home prices in the Phoenix-Mesa-Glendale metro area started to plummet in 2006 and didn’t find a solid bottom until the fall of 2011. Today, however, this is one of the fastest rising markets in the country.
4. Atlanta-Sandy Springs-Marietta, GA +15.61%
Atlanta’s housing market is leading the charge in the eastern half of the country. After falling longer and further than most east-coast metros, home prices in Atlanta are now rebounding strongly. Prices in this metro area rose by nearly 16% in July, compared to the same time last year.
Atlanta was also a standout in the latest S&P/Case-Shiller Home Price Index, posting the largest monthly gain of the 20 composite cities.
But here again, we are seeing a significant change with inventory trends. The number of homes for sale in and around Atlanta fell sharply toward the end of 2011, and into the first part of 2012. But the trend is reversing. According to Realtor.com’s monthly housing summary, the total number of active listings in Atlanta’s real estate market has risen by 17.85% in the last year.
Bottom line: Inventory is still tight in this market, but it probably won’t stay that way. Expect home-price appreciation to wane somewhat over the coming months.
5. Houston-Sugar Land-Baytown, TX +11.3%
Job gains and growing demand for housing have yielded strong numbers for the Houston real estate market. According to the Houston Association of Realtors (HAR), home sales rose by a whopping 26% in July, compared to a year earlier.
Listing volume has declined in this market as well, but the inventory crunch seems to be easing. “We are seeing more homes listed for sale, which should help bring the supply-and-demand scale into healthier balance,” said HAR chairman Danny Frank.
6. Dallas-Plano-Irving, TX +10.03%
Call it the Texas two step. Like Houston, the Dallas metro area has also moved into the top ten for home-price gains, according to CoreLogic’s latest report.
The broader Texas economy is thriving right now. This is largely the result of oil and gas production, combined with brain drain from other states like California. Job growth in the major metros of Dallas, Houston and Austin has been strong and steady over the last year. When last measured in July, the unemployment rate for Dallas had fallen to 6.4%, below the national average of 7.7%.
But not everyone is happy about the price gains within Dallas’s real estate market. According to Steve Brown, housing writer for the Dallas Morning News: “The pace of home price increases in North Texas is unprecedented and unsustainable. And the quicker the market cools down, the better it will be for everyone.”
7. Washington-Arlington-Alexandria, DC-VA +9.07%
Washington, D.C. was one of the first U.S. housing markets to recover, after the nationwide crisis that began in 2008. We reported on this as far back as January 2011, when the first signs of a rebound were emerging.
The difference here, when compared to some of the cities listed above, is that home prices in Washington, D.C. have been rising steadily over a longer period of time. When viewed on a graph, it’s a gradual upward slope, as opposed to a sharp spike. This is a good thing.
According to Washington Post writers Sheree Curry and V. Dion Haynes, local real estate agents are reporting multiple offers on desirable properties, as buyers and investors compete for limited inventory. Talk about a blast from the past.
8. Chicago-Joliet-Naperville, IL +8.63%
We covered the Chicago real estate market in depth a few days ago (see: Winds of Change Blow Into Windy City). So I won’t rehash it all here. Suffice it to say the Chicago housing market has changed dramatically over the last year and a half. Inventory has declined and continues to fall. This is driving prices up, as evidenced by the CoreLogic numbers and also those reported by Zillow and Realtor.com.
According to Realtor.com, the median list price for this market has climbed by nearly 20% over the last year or so. Meanwhile, Zillow reports a 16% jump in the median sale price. Whether listing or selling, the trend is the same. Values are rising.
9. New York-White Plains-Wayne, NY-NJ +7.82%
The housing recovery took longer to reach New England than, say, California and the Southwest. But it’s getting there. Home prices in the New York metro area have risen by nearly 8%, according to CoreLogic. The New York State Association of Realtors (NYSAR) reports a 16.4% increase in closed sales for the month of July, compared to last year.
It’s a good time to be a seller in this market. “The combination of strong buyer demand and constrained inventory levels continue to drive median price gains as sellers received nearly 96 percent of their asking price in July,” said Duncan MacKenzie, the chief executive at NYSAR.
The speed of recovery is mixed across this metro area. For instance, Zillow reports a 4.7% year-over-year increase in the median sale price for White Plains, N.Y.. In Newark, N.J., the MSP rose by 18.4% during the same period.
10. Philadelphia, PA +4.29%
I’m actually surprised to find Philadelphia on CoreLogic’s top-ten list for metro-level price gains. The median list price for the Philadelphia housing market has been mostly flat over the last year or so. Additionally, Philly’s unemployment rate is still higher than the national average. The jobless rate was 10.8% in July, according to the Bureau of Labor Statistics. This limits demand for housing.
As for the future of this market, much will depend on the inventory situation. For-sale inventory has declined a bit recently in the Philadelphia real estate market. If that continues, it could drive additional price gains. Otherwise, appreciation will level off.
Disclaimer: This story makes forward-looking statements about various housing markets across the country, as well as broader economic trends. Such statements should be viewed as matters of opinion, not as matters of fact. We make no guarantees or assertions about future economic conditions within the cities and metro areas listed above.