- The strongest improvements in median sale prices over the four-quarter period ending in June of 2013 were dominated by markets from the Sun Belt and Atlanta. These markets experienced some of the largest price declines following the subprime bust and economic recessions which were followed with a subsequent spike in foreclosures.
- While investors in lower-priced properties in these markets led the early increases in home purchases and price growth in 2011, steady price appreciation in these markets has helped to attract additional investors and first-time homebuyers into the fray, spreading the price appreciation and stability to other portions of the market.
- Several of the markets that experienced price declines are in states with a judicial foreclosure which take additional time relative to non-judicial states and create uncertainty for lenders. This uncertainty has weighed on price recovery in judicial states.
- Additional information on price dynamics is available in the Local Market Reports for the 2nd quarter of 2013.
- The price recovery continued to gain momentum in the 1st quarter of 2013. The strongest gains relative to the same time period in 2012 were concentrated in the sand states as well as the industrial Midwest, both of which were hit hard during the housing bust or recession.
- With the notable exception of Akron, the majority of metro areas in the top five are or were until recently in states that have a non-judicial foreclosure process. Note the absence of any markets in Florida from the top five and the abundance of markets in judicial states in the bottom five.
- The slow judicial process has held many foreclosures in process, which are only now hitting the market and weighing on price growth.
- Searching for information on your market? Price trends for additional markets are available in the 1st quarter Local Market Reports.
REALTORS® generally expect to see improving prices for the next 12 months, according to the January REALTORS® Confidence Index. The graph below shows the state median price expectation of respondents to the January 2013 survey.
Several states in the West, as well as Texas, Florida, and North Dakota, are in the group of states where the median price expectation is from 4.0 to 7.5 percent. Price trends vary, but low inventory and falling foreclosure rates are generally pushing prices upward.
Home prices continue to firm up as demand is reported to be increasing faster than supply. From the current survey, 69 percent of respondents to the REALTORS® Confidence Index reported constant prices, higher than July’s figure of 64 percent. About 30 percent reported constant prices while 39 percent reported rising prices. About five percent reported seeing price increases of 10 percent or more.
At least in regards to prime commercial real estate properties, prices have been making a very nice recovery. Commercial real estate prices in September were up 6.2 percent from one year ago, and are now very close to the peak prices achieved in 2007. The higher prices are driven partly by very low interest rates, which are forcing investors to seek out rent-income producing assets rather than keep cash in the bank. Furthermore, some investors are borrowing cheaply (say a 3% rate) and then buying properties that generate a much higher yield.