A hot summer of home buying helped boost market conditions across many parts of the country, but in August, large amounts of REO inventory still hinder bottom ranked markets from realizing further recovery.
Pro Teck Valuation Services Home Value Forecast for August reports that 76 percent of Core-Based Statistical Areas (CBSAs) tracked were classified as being “normal” or above. This is a 6 percent improvement from July’s 70 percent. Pro Teck adds that included in this positive trend, is the fact that for August only 1.4 percent of CBSAs tracked were ranked “weak” or “distressed”.
"A number of factors go into this improvement," said Tom O'Grady, CEO of Pro Teck Valuation Services. "Low interest rates, the loosening of credit, improved employment numbers and the positive effects of the traditional summer home buying period all have a role."
Pro Teck compares these stats to those of two years ago and the progress made is clear. From August 2014 to August of this year, there was a 31 percent increase in CBSAs ranked as “normal” or above and a decrease of 7.1 percent of CBSAs labeled “weak” or “distressed. Pro Teck mentions that during this time much of the REO surplus was worked back into the market. This, though, has left pockets of slower recoveries driven by local factors.
In addition to analyzing the classifications of CBSAs based on a number of leading real estate market-based indicators, the report ranks the single-family home markets in the top 200 CBSAs and highlights the strongest and weakest markets.
This month, Pro Teck ranks the top 10 CBSAs as follows:
- Boise City, ID
- Bremerton-Silverdale, WA
- Colorado Springs, CO
- Durham-Chapel Hill, NC
- Merced, CA
- Mount Vernon, Anacortes, WA
- Oak Harbor WA
- Visalia-Porterville, CA
- Washington-Arlington-Alexandria, DC-VA-MD-WV
- Charleston-North Charleston, SC
The report shows that the Boise, ID CBSA tops the list this month, with a 49 percent drop in active listing making for a very limited supply of available homes. It is also noted that Boise home prices are at an all-time high, with projected steady growth for the next five years.
In contrast the bottom 10 CBSAs this month include:
- Huntington-Ashland, WV-KY-OH
- Huntsville, AL
- Miami-Miami Beach-Kendall, FL
- Chicago-Naperville-Arlington Heights, IL
- McAllen-Edinburg-Mission, TX
- Billings, MT
- Midland, TX
- Jacksonville, NC
- Atlantic City-Hammonton, NJ
- Saginaw, MI
Seeing Miami in the bottom tier of the rankings may surprise some readers, but the report states that this placement is starkly due to the still large REO inventory slowing market recovery. REO in Miami as a percentage of sales is at 13 percent, but this is still well above the 3-5 percent norm of a healthy market.
"While there has been drastic improvement, a major decrease in investor-driven purchases and foreign buyers has slowed Miami's recovery," said O'Grady. "Some have also cited Zika concerns as a reason for the slowdown—we will continue to monitor the situation in the months ahead."