Five cities show impressive growth from Q1 to Q2 in searches for “Homes for Sale.” Is this an indication of an improvement with the housing market?
In our recent Quarterly State of the Housing Market report, we tracked the top 100 searched cities on Homes.com. In that list were five cities marked as “most improved” for fastest growth in searches from Q1 to Q2. We take a closer look into the economic conditions that may have impacted this growth and highlight what this means for potential home buyers and sellers.
In the number one spot? Baltimore, MD displays the highest quarterly growth at 131% in home buyer searches on Homes.com. Why the huge increase? Perhaps the weather might be affecting this change, as Baltimore temps average about 80-85 degrees the past few months, which makes perfect house hunting weather. In addition, property inquiries, which are users requesting information from a property listing on Homes.com, increased 19% this quarter. Economic factors, such as the reported unemployment rate, may also contribute to the housing market in Baltimore. According to the US Department of Labor, Bureau of Labor Statistics, this metro area’s current reported unemployment rate comes in at 7.8%[i], below the national level of 8.4% and a 1.3% decrease from this time last year; showcasing, that an improved job market reinforces potential home buyers’ confidence in the real estate market.
Up next on our list is Boston, MA. Boston ranks #2 with the search growth at 108%, and it’s no wonder as the current unemployment rate falls well below the national level at 5.8%, an astonishing 17% decrease from the year before! This might have to do with the amount of Fortune 500 companies, major corporations, such as Liberty Mutual Insurance Group and BJ’s Wholesale Club, headquartered in the city. Another indicator regarding the Boston housing market is the current homeownership rate, reported by the US Census Bureau, which is 68.3%, a 7% increase from last year and above the national level of 65.5%[ii]. This could significantly impact the inventory levels of housing on the market, signaling a limited supply with an increased demand. With this type of interest and a healthy job market, Boston sellers are sure to receive their asking prices. All of these factors show that Boston’s real estate market is heating up and the American Dream is going strong.
Third on our list is Philadelphia, PA, with a 70.5% increase in home buyer searches for Q2. The current reported unemployment rate in this metro area is steady at 8.9% and relatively close to the national rate. The homeownership rate is very similar to Boston’s at 68.4%, also above the national rate, proving home ownership is a strong characteristic to the Philadelphia area. Potentially the biggest impact in increased searches, however, is the slight decrease in home prices, currently reported at a 3.2% decline year over year from the Fiserv Case-Shiller Indices[iii], making the area more attractive in terms of affordability to potential home buyers.
These top 3 metros represent the areas with the highest home buyer search growth on Homes.com in Q2, and noticeably they are all relatively close in proximity within the northeast area of the country. This could indicate that current weather conditions may influence the home buying search trends with locations. While Q2 warms up, home buyers may be looking toward more northerly destinations. Michael Feder, CEO of Radar Logic, a New York firm that provides data analysis for real estate, suggests that mild weather may have temporarily boosted demand[iv]. Or perhaps the home buying market is simply strengthening as a result of a healthy job economy? Only time will tell if this is the case.
The final ranking cities in the top 5 are southeast locations, Charlotte, NC and Atlanta, GA. Charlotte increases in searches by 51% this quarter; and, although the current reported unemployment rate is 10.0%, well above the national level, it significantly decreased almost 12% from last year! This is a clear indicator that the job economy is improving, and thus maybe improving the housing market.
Atlanta completes the list with a 50% increase in home buyer searches this quarter, despite the fallen home values in this metro area. The Standard & Poor’s Case-Shiller index showcases these average home price indices, and Atlanta currently reports a 14.5% annual decrease in the home price; yet, it sees recent improvements with month to month increases at 4% for May 2012[v]. The job market is also showing signs of improvement with a current 9.3% unemployment rate, and although slightly above the national rate, it decreases almost 9% from last year. This again signals a positive outlook for the housing market in Atlanta.
At Homes.com, we are excited to report cities with significant quarterly growth. It not only shows improvement in local housing markets, but that the American Dream of homeownership is strong and could soon impact many more markets nationwide.
[i] Reported by Bureau of Labor Statistics, United States Department of Labor, for metropolitan area and not seasonally adjusted as of June 2012
[ii] Reported by US Census, Housing Vacancies and Homeownership, for metropolitan area as of Q2 2012
[iii] Referenced by The Inquirer, Philly.com, Home prices rise slightly, but not in the Philadelphia area
[iv] Referenced by The Inquirer, Philly.com, Home prices rise slightly, but not in the Philadelphia area
[v] Reported by Standard & Poor/Case-Shiller for top 20 metropolitan areas and non-seasonally adjusted as of May 2012