Rising Home Prices: Coming Soon to Your Town?
By Nick Caruso
The housing market is on the road to recovery and you know what that means: There is more good news to be shared and celebrated in the industry. According to reports from Kiplinger, 12 metropolitan areas fared the best in 2012, thanks to below-average unemployment rates, an improving economy and increased buyer confidence. All of these factors and more are helping transform these cities into seller's markets:
"I was really surprised to see some of the cities that ended up on the list. Provo, Utah and Salt Lake City surprised me, but these are cities that had very little boom or bust," she says. "They plugged along, their economies are growing and their populations are rising. They also have relatively low rates of unemployment."
These 12 cities are either approaching a seller's market or are in transition. Falling rates of home inventory, and in some cases exceptionally low inventory, is also a large factor in this, helping drive home prices in the right direction.
Just how much inventory does a city need to have to be considered a "low inventory" area? Generally speaking, four-to-six month’s supply is considered balanced between sellers and buyers, says Esswein. Seattle, for example, only has 2.2 month’s supply, while Phoenix, Ariz. sports a 2.7 month’s supply. These cities along with Salt Lake City are an extreme case scenario, however, home prices are benefitting as a result.
Investors are also getting their feet wet. When the market initially dropped, prices had fallen so much that it attracted heaps of investor attention. Investors scooped up most of the available inventory for sale, notably distressed properties, foreclosures and other properties that they could buy cheaply and hold for the long term, says Esswein. This led to and aided in the aforementioned low inventory numbers that are indeed driving prices up again.
And there's that pesky "F" word again. Although Esswein points out that Phoenix and Cape Coral were known for having high rates of foreclosures, she doesn't think they are the make-or-break factor here. "I don't necessarily think it's the current rate of foreclosure that distinguishes the cities that are doing best, it's more so the rate at which foreclosed properties are coming to the market and sold off," she says. "The quicker you sell off those foreclosures, the quicker the market takes its hit. You suffer for awhile and then you recover."
The cities in question saw a 28.4 percent boost in prices throughout last year, but the likelihood of sustaining that number is slim. "Once this bouncing from the bottom ends, we'll see a much more modest rate of appreciation going forward. The intense price increases will level out for the national market as a whole," says Esswein.
For 2013, Kiplinger predicts a modest year-over-year raise gain of about one-to-two percent, nationally. However, once the rebounding economy builds itself back and strengthens, that will also have a large impact both a local and national scale.
Randy Guth, Owner / President
Randy Guth, Owner / President of EXIT Inland Realty, has been in the real estate business for over 12 years. A short sale and investment expert, Randy specializes in the purchase and sale of distressed properties. His expertise is of great benefit to his clients and his agents. He is passionate about helping his agents develop their skill sand master every aspect of the real estate business ensuring all of his firm’s clients receive the level of service he would provide himself.
As a Franchisee, Randy is committed to providing his agents with efficient systems, leadership, training, and fostering a high-energy motivational atmosphere. The success of his agents is his success, and nothing makes him happier than to see his team succeed. He takes his responsibility as a leader seriously and has become one of the best trained in the business. He has completed training in every aspect of the business with some of the industry’s leading REALTORS®, Brokers, and best known Trainers. He is equipped with the expert knowledge to guide and coach his agents in any specialty they wish to develop, and to assist his clients in all of their real estate endeavors.
• Phoenix, Ariz.This upturn is without question positive news. According to Pat Esswein, associate editor for Kiplinger's Personal Finance magazine, there are many positive and healthy drivers aiding in these cities' turnaround.
• Provo, Utah
• Cape Coral-Ft. Myers, Fla.
• Minneapolis, Minn.
• Akron, Ohio
• Youngstown, Ohio
• Seattle, Wash.
• Salt Lake City, Utah
• Boise, Idaho
• San Jose, Calif.
• Washington, D.C.
• Tucson, Ariz.
"I was really surprised to see some of the cities that ended up on the list. Provo, Utah and Salt Lake City surprised me, but these are cities that had very little boom or bust," she says. "They plugged along, their economies are growing and their populations are rising. They also have relatively low rates of unemployment."
These 12 cities are either approaching a seller's market or are in transition. Falling rates of home inventory, and in some cases exceptionally low inventory, is also a large factor in this, helping drive home prices in the right direction.
Just how much inventory does a city need to have to be considered a "low inventory" area? Generally speaking, four-to-six month’s supply is considered balanced between sellers and buyers, says Esswein. Seattle, for example, only has 2.2 month’s supply, while Phoenix, Ariz. sports a 2.7 month’s supply. These cities along with Salt Lake City are an extreme case scenario, however, home prices are benefitting as a result.
Investors are also getting their feet wet. When the market initially dropped, prices had fallen so much that it attracted heaps of investor attention. Investors scooped up most of the available inventory for sale, notably distressed properties, foreclosures and other properties that they could buy cheaply and hold for the long term, says Esswein. This led to and aided in the aforementioned low inventory numbers that are indeed driving prices up again.
And there's that pesky "F" word again. Although Esswein points out that Phoenix and Cape Coral were known for having high rates of foreclosures, she doesn't think they are the make-or-break factor here. "I don't necessarily think it's the current rate of foreclosure that distinguishes the cities that are doing best, it's more so the rate at which foreclosed properties are coming to the market and sold off," she says. "The quicker you sell off those foreclosures, the quicker the market takes its hit. You suffer for awhile and then you recover."
The cities in question saw a 28.4 percent boost in prices throughout last year, but the likelihood of sustaining that number is slim. "Once this bouncing from the bottom ends, we'll see a much more modest rate of appreciation going forward. The intense price increases will level out for the national market as a whole," says Esswein.
For 2013, Kiplinger predicts a modest year-over-year raise gain of about one-to-two percent, nationally. However, once the rebounding economy builds itself back and strengthens, that will also have a large impact both a local and national scale.
Randy Guth, Owner / President
Randy Guth, Owner / President of EXIT Inland Realty, has been in the real estate business for over 12 years. A short sale and investment expert, Randy specializes in the purchase and sale of distressed properties. His expertise is of great benefit to his clients and his agents. He is passionate about helping his agents develop their skill sand master every aspect of the real estate business ensuring all of his firm’s clients receive the level of service he would provide himself.
As a Franchisee, Randy is committed to providing his agents with efficient systems, leadership, training, and fostering a high-energy motivational atmosphere. The success of his agents is his success, and nothing makes him happier than to see his team succeed. He takes his responsibility as a leader seriously and has become one of the best trained in the business. He has completed training in every aspect of the business with some of the industry’s leading REALTORS®, Brokers, and best known Trainers. He is equipped with the expert knowledge to guide and coach his agents in any specialty they wish to develop, and to assist his clients in all of their real estate endeavors.
RIVERSIDE CA – EXIT INLAND REALTY Because buying and selling a home is a big decision, Exit Inland Realty in Riverside, CA is your real estate source for Riverside, Canyon Crest, the Wood Streets and the University of California (UCR) area. You will have step-by-step guidance to make the buying/selling process as smooth as possible. Call us today at: 951-300-1010. You are our #1 priority. Please give us the opportunity to prove it!
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