Pro Teck Valuation Services' Home Value Forecast (HVF) in December looked at trends in a number of residential real estate categories over the past year. HVF examined the top three Core Based Statistical Areas (CBSAs) in sales price, list price appreciation, remaining inventory and sales price appreciation. It also looks back at the top three CSBAs from last year to see how they are performing today.
Three California metros top the list in 2014 and 2015: San Francisco, San Rafael and San Jose. California CBSAs accounted for 13 of the top 15 spots in this category, with Honolulu, Hawaii (No. 4) and Vineyard Haven, Mass. (No. 7) rounding out the list.
“Last year, we forecasted that San Francisco’s home prices would start to stabilize — that did not happen, as average sold price is now over $1.2 million,” Pro Teck Valuation Services CEO Tom O’Grady said in a news release. “One reason for this was that interest rates have stayed at historic lows, making homes more affordable at all price points. With interest rate increases anticipated in the near future, we will keep an eye on the impact on 2016 home prices.
“An influx of professionals working in the Research Valley biocorridor has strained the housing stock and changed the type, size and cost of new housing,” O’Grady added. “This trend should only continue as Texas A&M and the community drive advancements in the bio therapeutic and biopharmaceutical industries.”
Months Remaining Inventory (MRI) is another indicator that shows how hot a market is at a particular time.
If an area has a high MRI of 10 months or more, it means that the market is saturated — a buyer’s market. If MRI is below three months, it becomes a seller’s market.
Today, the top three markets are on the West Coast, all with around two months’ inventory — leading to fierce competition for homes, and many selling for above asking price.
Two of the leaders in 2014, San Jose (2.03 MRI) and Santa Cruz (2.93), remained hot markets in 2015. In all, 24 CBSAs have less than three months of inventory, leading to limited housing supply and fueling price increases.
Sales price appreciation is a good thing, but the statistic by itself can be deceiving, the report stated. The top three CBSAs all had more than 20 percent appreciation for the year, yet all were heavily impacted by the housing crisis.
“What these numbers reflect is that the market has responded to the bargains that are out there, and that the housing market has begun to reflect supply/demand fundamentals,” O’Grady said.