When it comes to real estate prices or housing markets, it’s all about location, location, location. It doesn’t take a brain scientist to understand why housing in the Midwest is not the same as the housing market in Washington, D.C.
Naturally, you can’t choose to live six states away just because there are fewer foreclosures and the housing market appears healthy there. Unless you plan on leaving your job and your kids’ schools, there’s nothing you can do about changing real estate markets. Still, it’s interesting to use the most recent data to stack regions up against each other for signs of strength — and signs of weakness — right now.
After all, a big reason we are in this current economic mess is because housing collapsed. A recovery in the real estate market would be very helpful toward boosting spirits and helping many American families recover some of the net worth they lost as the housing bubble burst.
So what’s hot and what’s not? I looked at the most recent data through June from Clear Capital, a premium provider of real estate data, to slice and dice home price numbers into:
- Best and worst markets quarter-over-quarter.
- Best and worst markets year-over-year.
- Best and worst markets by REO saturation (that is, “Real Estate Owned” or bank-owned property).
- Best and worst markets based on Clear Capital’s full-year 2012 forecast.
Here’s how the 50 biggest housing markets in the U.S. shook out based on prices.
Best Housing Market Q1 to Q2: Columbus, Ohio
According to Clear Capital, the capital of the Buckeye state saw the biggest gain over the last three months. Columbus, Ohio, scored an impressive 13% jump from its Q1 pricing. However, Clear Capital warned not to read too much into the trend.
“Volatility for Columbus, OH is typical, having seen 14 quarterly price swings greater than 5.0% since the start of the downturn in 2006,” the report reads. “Also worth considering is the relatively low median price-per-square-foot of $69, as compared to the national median price-per-square-foot of $105.”
Rounding out the top five quarter-over-quarter gainers are:
2. Phoenix, Ariz., with an 8.7% price gain
3. Seattle-Tacoma area of Washington with an 8.4% gain
4. San Jose and Santa Clara, Calif, region with a 8.1% gain
5. Washington, D.C., and Northern Virginia, up 6.3%
Best Housing Market June 2011 to June 2012: Phoenix, Ariz.
The Phoenix metro area of Arizona, encapsulating Mesa and Scottsdale according to Clear Capital, racked up a stunning 20.4% jump in prices from June 2011 to June 2012.
And unlike Columbus, Phoenix growth doesn’t seem to be a fluke based on some noise in the data.
Phoenix “has been a market showing consistent signs of strength for the past 10 months,” Clear Capital writes. “With current quarterly growth of 8.7% and annual gains of 20.4%, the positive trends in this market are supported on a more sustainable basis.”
Rounding out the top five year-over-year gainers are:
2. Columbus, Ohio, up 14.3% since 2011
3. Minneapolis-St. Paul, Minn., up 13.1% in the last year
4. Miami metro area, including Ft. Lauderdale, Fla., which was up 11.6%
5. Pittsburgh, Pa., up 11.5% year-over-year.
Best Housing Market Based on 2012 Forecast: Seattle, Wash.
The best housing market based on full-year trends appears to be the metro area of Seattle, Wash., which includes Tacoma and Bellevue. Clear Capital has forecast 14.4% growth by year’s end for the region.
While June figures showed just 2.2% year-over-year growth in housing prices for the area, there was an 8.4% quarter-to-quarter jump. It appears that while Seattle isn’t blazing a trail with big jumps in home prices, it is indeed one of the markets clearly trending higher right now.
Rounding out the top five markets based on Clear Capital forecasts:
2. Phoenix, Ariz., is forecast to see a 10.4% rise in prices by the end of 2012
3. Las Vegas, Nev., should see a 9.3% rise in prices
4. The Miami metro area should see an 8.1% increase
5. California’s San Francisco-Oakland region should see prices rise 7.3%
Lowest REO Saturation: Rochester, N.Y.
Of course, it’s worth noting that some of these top performers are still far off their highs and remain under pressure from a big backlog of foreclosures and bank-owned properties. So-called REO homes or “real estate owned” properties need to be moved off the market if regions are ever to find equilibrium.
While Las Vegas is bouncing back, it still is way behind on REO properties — suffering an REO saturation of 42.2%! On the other hand, the sleepy market of Rochester, N.Y., doesn’t have that problem with a mere 4% REO saturation according to Clear Capital.
Of course, bank owned properties aren’t the whole story. After all, Rochester isn’t burning down the house with its 3.7% year-over-year price growth and a price forecast that should be flat in 2012 compared with 2011.
Rounding out the five lowest percentages of REO properties:
2. Pittsburgh, Pa., at 6.1% REO homes
3. Hartford, Conn., at 6.6% REO homes
4. The Long Island region of New York and New Jersey at 6.7% REO homes
5. Honolulu, Hawaii, with 8.6% REO
Worst Housing Market Q1 to Q2: Providence, R.I.
Now that we’ve seen the best, let’s look at the rest. At the bottom of the barrel from the first quarter to the second quarter is Providence, R.I. The region has suffered a painful 4.9% decline in prices in just three months.
The good news is that the full-year forecast according to Clear Capital is only a 0.3% decline from 2011 through 2012. But the bad news is that it’s still a decline.
Interestingly enough, the saturation of foreclosures (as measured by REO saturation) is just 14.2% — well below some of the other laggards.
Here are the rest of the five worst quarter-to-quarter price losers:
2. Honolulu, Hawaii, is down 1.4%
3. Charlotte, N.C., is down 1.2%
4. Raleigh, N.C., is down 1.1%
5. Detroit, Mich., is down 0.9%
Worst Housing Market June 2011 to June 2012: Atlanta, Ga.
If you think the 4.9% decline for Providence was bad across three months, just check out the long-term declines for Atlanta, Ga., and its metro area that includes Sandy Springs and Marietta. Property prices are off a gut-wrenching 12.2% in the last 12 months, according to Clear Capital.
REO saturation is high at 44%, though the region did eke out a 0.9% gain across the last three months.
Rounding out the rest of the five worst year-over-year markets:
2. Birmingham, Ala., is down 9.3% in the last year
3. Providence, R.I., is off 8.7%
4. Memphis, Tenn., is off 6.4%
5. Philadelphia, Pa., is off 3.7%
Worst Housing Market Based on 2012 Forecast: Atlanta, Ga.
Well, it’s no surprise after those brutal numbers that Atlanta returns for a repeat appearance as the worst market for 2012 based on Clear Capital’s full-year forecast. The region is projected to suffer a 3.2% decline in prices this year, the worst of 50 regions surveyed by the analytics and research company.
And it looks like more pain is in the works, according to Clear Capital. “Atlanta, while also hit hard over the last six years, is not yet positioned to snap back like Seattle and Phoenix,” the authors of the report said.
The south is particularly hard-hit, with Birmingham and Memphis making the previous list of the worst year-over-year decline in June, and two North Carolina cities coming in second and third for the worst 2012 forecasts.
Here’s the rest of the list:
2. Charlotte, N.C., is forecast to see a 2.4% price decline in 2012
3. Raleigh, N.C., is forecast to see a 2% price decline
4. Detroit, Mich., is forecast to see a 1.7% price decline
5. St. Louis, Mo., is forecast to see a 1.1% price decline
Highest REO Saturation: Detroit, Mich.
Anyone who has followed the job market or foreclosure trends over the last few years should not be surprised to find Detroit, Mich., at the top of the list for REO saturation.
For those unfamiliar, REO properties are owned by a lender — typically a bank or government agency — after an unsuccessful foreclosure auction. In short, the owners have been kicked out for failing to make payments but there is no other tenant ready to buy the property. This could be because the site is a wreck due to neglect and disrepair, or just because there is such a glut of properties that buyers can be choosey.
Detroit is suffering under a nasty 52.2% REO saturation right now.
That’s not the worst ever tallied by Clear Capital, which notes there were “markets like Phoenix where REO saturation soared to 63.0% by mid 2009.” Still, it’s pretty ugly.
Here are the others in the five worst regions for REO saturation:
2. Atlanta, Ga., had 44% REO saturation
3. Las Vegas, Nev., had 42.2% REO saturation
4. Memphis, Tenn., had 41.6% REO saturation
5. Birmingham, Ala., had 40.2% REO saturation
For the full report on June home price stats, visit Clear Capital.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at email@example.com or follow him on Twitter via @JeffReevesIP.