Dennis Norman
According to the Housing Market Report that was issued this morning by Radarlogic, home prices increased in June from the previous month in 23 out of the 25 metropolitan areas tracked by their company. The report also showed that it is not just first-time home buyers fueling the market right now, more expensive move-up home sales are on the rise.
Overall the composite for all 25 metros showed a 3% gain in price from May to June representing one of the largest monthly gains reported by RadarLogic since June 2000. There has been a trend of price increases reported for the 25 metro areas for the past few months. In fact, the increase in the Radar Logic Composite from February to June outpaced the house price gains over the same period during the previous threes years, and the increase in house prices from April to June was the largest since the beginning of Radar Logic’s date in 2000.
Other highlights from the RadarLogic Housing Market report for June are:
- In 14 of the 25 metro areas tracked by Radar Logic, over half of all homes sold in June were sold at a price per square foot within one standard deviation of the mean motivated price (in plain language I think what they are trying to say is the prices between a “normal” home sale and a “motivated sale” (such as a foreclosure) did not have a large gap between them indicating that foreclosures have done all the damage to home prices they are going to do and home prices may be stabilizing.)
- Since the beginning of 2009, home sales in the top 50 percent of zip codes ranked by median home price have become a larger share of total sales in each of the 25 metro areas.
- The number of sales requiring a jumbo loan increased over the first six months of the year in several major metropolitan areas. In most of these cities, jumbo sales increased faster than sales that qualify for conforming loans. (a “jumbo” loan refers to a loan amount that exceeds the maximum loan amount for a Fannie Mae loan which, depending on where you live, could be from $417,000 up to $938,.250)
The Radar Logic report states “observing the current upward momentum in prices, it is reasonable to believe that the housing sector may see a late seasonal peak this year.”
The following list shows the metro areas covered by the RadarLogic report where home prices have done the best in the past year:
- Philadelphia – 2.9 percent decline in home prices
- Charlotte – 3.2 percent decline in home prices
- Milwaukee – 3.7 percent decline in home prices
- Cleveland – 4.6 percent decline in home prices
- Washington D.C. – 5.7 percent decline in home prices
The list below shows the metro areas that, of the 25 covered, home prices have done the poorest in the past year:
- Las Vegas – 32.1 percent decline in home prices
- Phoenix – 26.6 percent decline in home prices
- Miami – 23.3 percent decline in home prices
- Chicago – 21.4 percent decline in home prices
- Detroit – 20.2 percent decline in home prices
The current home sale numbers shown in this report suggests both a return to the historical summer buying pattern of home buyers and activity that is a result of pent-up demand. Traditionally, we would see a slow-down in sales during the upcoming winter months but with the market stabilizing bargain hunters and investors may be out in full force and prop up the sales for the winter months…if we’re lucky.
At the end of the RadarLogic report is this statement, which I sure hope proves to be true:
“In effect, the housing market has gone through its period of correction and now is searching for equilibrium after shedding the effects of speculation during the past decade. At this point, most of the excess value has been purged from the market and the housing sector is at a point at which sustainable growth could resume in the near future.”
What’s interesting about the Radar Logic Housing Report, and I think that at first blush may make it more representative of the market than some of the other home price reports that are out there, is that the Radar Logic Housing Report is based upon the price per foot that homes sell for in the 25 metropolitan markets they report on. This would tend to lead to a more “apples to apples” comparison in my opinion as just looking at sale prices and not home size could end up skewing the data in areas where the size and/or type of housing stock changed over time.
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