The nation’s housing market continues to show a promising turnaround. Home prices rose by more than 5% between the second quarter of 2012 and the second quarter of 2013. Homes also are selling faster, and the number of homes on the market is down by more than 10%.
This week, Realtor.com, operated by Move.com, released its Turnaround Towns report on the nation’s housing markets that are leading this recovery. According to the data, places like Oakland, San Jose and even Detroit have had home price increases of well more than 25%. 24/7 Wall St. reviewed Realtor.com’s list of the 10 housing markets that had the biggest increases in home prices, accompanied by the largest declines in the median inventory age and total inventory between the second quarters of 2012 and 2013. These are America’s hottest housing markets.
That home prices have grown so much is even more impressive considering several were among the hardest hit during the housing crisis. According to Realtor.com vice president Alison Schwartz, home prices in Santa Barbara, Oakland, Reno and Detroit — all now among the hottest markets — declined by more than 40% during the housing crisis. In Detroit, they declined by nearly 49%.
Detroit’s presence on this list may be surprising to many considering the city has recently filed the largest municipal bankruptcy in U.S. history. Home prices in the city, however, soared by nearly 40% in the past year. The city also had one of the shortest median inventory age in the country. The area’s economy still has a long way to go, and home prices are still very low. However, Move.com president Steve Berkowitz noted, Detroit has made impressive gains in the past year. “We’ll be watching the inventory levels in the months ahead, but if this past quarter is any indication, Detroit won’t be giving up without a fight,” he said.
There is some evidence that growth in markets like Detroit may be inflated by outside investment, rather than by people interested in moving to the area and living there. “While investors certainly have played a role, these healthy price increases can’t be attributed to any one factor,” Schwartz said. She added that some markets that have seen a great deal of
Investor activity is likely a factor, particularly in some of the harder-hit cities like Detroit and Reno. But, as Schwartz explained, places like San Diego, Oakland and San Jose are experiencing robust economic growth, particularly in the tech industry, which is increasing demand in these markets.
Indeed, these areas are experiencing faster job growth than most of the country. Between June 2012 and June 2013, the U.S. unemployment rate fell by 0.6 percentage points. In San Diego and San Jose, the rate fell by 2 percentage points. In fact, most of these cities had unemployment rates decline faster than the national average.
24/7 wall St. reviewed the 10 cities Realtor.com identified as leading the nation’s housing recovery. These housing markets were compared as part of a group of the 145 largest housing markets in the country. To make the list, the markets needed to have among the fastest change in median list price and the largest declines in median age of inventory and total inventory between the second quarters of 2012 and 2013. In addition to data provided by Realtor.com, 24/7 Wall St. reviewed unemployment rates in the metropolitan areas where these markets are located, as well as one-year unemployment rate changes. Unemployment data came from the U.S. Bureau of Labor Statistics, and was as of June 2013.
These are America’s hottest housing markets.