110 markets have now fully recovered, down 1 from previous month
NORFOLK, Va. (January 6, 2015) – Homes.com®, leading online real estate destination, has released its October Local Market Index, a price performance summary of repeat sales in the top 100 markets, and the companion Midsize Markets Report for defined areas ranked 101-300. Among the nation’s top 100 largest markets, Homes.com Local Market Index showed 58 markets posting month-over-month gains based on a three-month moving average basis, which is down 9 markets from the prior month and down 18 markets from August. In October, 133 midsize markets increased in value over a three-month average, down 14 from September.
Moderating Appreciation Slows Return to Peak Prices
The number of fully recovered markets among the nation’s top 300 markets declined in October, dropping the total of fully recovered markets from 111 to 110, or 36 percent of the 300 markets tracked by Homes.com. Tuscaloosa, AL lost enough value to slip below the 100 percent recovered mark and is now at 99.95 percent recovered.
With 110 markets fully regaining their peak prices, hundreds of millions of dollars of lost homeowner equity have been restored, according to Homes.com’s October Local Market Index. Slowing demand contributed to moderate price increases during the summer and fall months. Inventory increased as new homes were made available in many markets. With winter approaching, typically a slow time for real estate sales, more markets may slip below the fully recovered level.
Moreover, the monthly rate of change in the price index has slowed over the past three quarters, potentially lengthening the time for additional markets to reach a full rebound in the coming months. In October, the average rebound percentage of all 300 markets affected by the Great Recession was 95.29 percent, which is only 4 percent higher than the average of 91.73 percent posted in October 2013 and 2.7 percent higher than the January 2014 average of 92.82 percent.
Those markets that lost more than others during the housing recession will have greater difficulty reaching full price recovery. Out of the 38 markets in the top 100 that experienced losses of more than 20 percent of their value, only two have rebounded. By contrast, all 25 markets with minimal price declines (less than 10 percent of their value) are now fully rebounded. Of the 37 markets with moderate price declines of 10 to 20 percent, 17 have not statistically reached rebound status. They range in rebound percentage from a low of 88 percent to a high of 97 percent and are located primarily in the Northeast and Midwest.
“We’ve seen 18 months of steady progress toward a full price recovery, with more than one-third of America’s real estate markets fully rebounding, restoring lost equity to millions of homeowners,” said David Mele, president of Homes.com. “October’s moderate price increases appear to have temporarily halted earlier gains and may make it increasingly difficult for markets with severe and moderate losses to return to their peak prices. However, we’re hopeful that once the spring sales season resumes, we’ll see more progress in markets that suffered the most.”
Widespread Slowdown in Largest Markets
The flattening of price increases was widespread and reduced the number of large markets reporting gains. In October, 13.4 percent fewer markets gained value than in September. Fifty-eight of the top 100 markets posted month-over-month gains based on a three-month moving average basis, down 9 markets from September and 18 markets from August.
October saw declines in 42 markets for the three-month average compared to October 2013, when no markets saw decreased – a sign that the number of markets experiencing positive monthly home price index gains is shrinking. Likewise, prices in the top ten markets are appreciating at a much slower rate than they were a year ago. The year-over-year gains in October 2014 for the top ten markets ranged from a low of 5.71 percent to a high of 7.63 percent, which is a slower rate of increase in these markets than at the beginning of fourth quarter of 2013.
The number of markets that fell below a 5 percent appreciation rate increased significantly, starting in the third quarter of 2014. The first two quarters of the year reflected an average of 14 markets with rates below 5 percent. The third quarter saw that rate jump to 59 markets.
Largest Markets Summary:
- Baton Rouge, LA had the largest three-month average increase of 0.4 percent, while Lakeland-Winter Haven, FL had the largest average three-month decrease of 0.41 percent.
- New Orleans-Metairie, LA reached the number one spot for the first time with an annual percent change of 7.63 percent.
- California only had two markets in the top yearly gaining for October – the smallest number in 2014 to date.
- The West continued to dominate the top increasing markets on an annual basis, with Utah emerging as the state with the most markets gaining annually.
- Dallas-Fort Worth-Arlington, TX entered the top 10 annual list for the first time with a yearly increase of 5.71 percent.
- The three-month average percentage for the top 10 markets ranged from 0.23 percent to 0.4 percent, which was similar to the prior month’s data. The three-month average percentage change for all top 100 markets was 0.02 percent, lower than the 0.05 percent recorded in September.
Midsized Markets: Short-term gains, long-term decline
In October, the number of midsize markets that gained value declined 10 percent from September, indicating that some smaller markets are seeing price appreciation in the short term.
Measured on a year-over-year basis, 199 out of 200 markets had positive gains in market value during October, and annualized changes were distributed across the country. Of the top 10 markets, seven are located in the West, two in the Midwest and one in the South.
The average annual price appreciation for all mid-tier markets for October was 3.9 percent, down 53 percent from the average annual appreciation in October 2013 of 8.36 percent.
Midsize Markets by Region and Division:
- The top performing midsize market was Wichita Falls, TX. Other southern markets did not see a percentage higher than 0.48 percent.
- The bottom performing market was again Claremont-Lebanon, NH-VT in the Northeast.
- Only Las Cruces, NM did not see a decrease of the bottom performing markets.
Download all Homes.com Local Market Reports, supporting documents and rebound percentages for October 2014. Download the Homes.com Local Market Report tables and graphs. Learn more about the methodology used to create Homes.com’s Local Market Index, the Homes.com Rebound Report and other frequently asked questions.
To receive a comprehensive data file, including index values in every zip code within a local market, contact LocalMarketReports@Homes.com.
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