Price growth was strong in every region in October, including the Northeast where prices rose more than any other region. However, Midwest prices continued to trail the nation as the recovery is still fragile in the nation’s heartland.
While current quarterly gains are all under 5 percent, October marks the fifth consecutive month of quarter-over-quarter home price growth. Nationally, prices edged up 2.1 percent over the rolling quarter, higher than over September’s rate of growth. The West came in strong again, with quarterly gains of 3.7 percent. The South posted gains of 2 percent over the rolling quarter, according to Clear Capital’s October HDI Market Report.
Previously trailing in quarterly gains, the Northeast saw the largest jump in regional performance. Up 1.7 percentage points from September, the Northeast posted 1.9 percent growth quarter-over-quarter. Price gains across the low, mid, and top tier sectors all contributed to the region’s quarterly improvement.
Meanwhile, in Midwest quarterly growth of 1.0 percent was 0.9 percentage points lower than September’s. The Midwest tends to see quicker shifts in percentage change due to relatively low price points when compared to other regions. But there are certainly states within the Midwest, like Ohio, that have made notable progress. Ohio’s recorded quarterly gains of 1.6 percent are secondary to its more substantial long term price growth of 15.0 percent since 2008.
Today the National Association of Realtors released median prices for metropolitan areas for the third quarter. Prices in Chicago are down 1.8 percent from a year ago; Madison, WI is down 4.3 percent; Bloomington, IL is down 0.5 percent; and Champaign-Urbana is down 3.6 percent.
Yearly home prices in October came in strong. National gains of 4.6 percent are the highest since August 2010, when the first-time-homebuyer tax credit was enticing buyers.
The West posted its first double digit yearly gains since 2006, at 11.4 percent. While the hard hit region showed little signs of slowing down, it has a long way to go. Current prices are still 42.9 percent below the peak. On par with quarterly trends, the Midwest saw yearly gains soften to 1.1 percent. This, in part, reflects higher prices a year ago when the region saw a short uptick.
October year-over-year home prices in the South and the Northeast made headway; each up at least 1.0 percentage point over September, to 4.2 percent and 2.0 percent, respectively. With yearly growth of 6.8 percent, Virginia outpaced its region by 2.6 points.
The highest performing metros are a diverse group. In October, strong markets like Phoenix and Seattle were bested by Atlanta. However, Atlanta is in the early stages of a recovery, highlighted by a relatively high REO saturation rate of 37.8 percent.
Atlanta’s growth of 8.0 percent over the last rolling quarter represents a significant reversal for the market. Even though REO saturation remains the highest on the list, the new found growth was supported by a 9.7 percentage point drop over the last six months.
While trends are improving, Atlanta’s price points are extremely low, with a median price-per-square-foot of just $58. That’s nearly half the national median price-per-square-foot of $107. Even slight shifts in price can have a relatively large impact on percentage change for Atlanta.
Cleveland’s quarterly and yearly gains of 7.1 percent and 4.9 percent, respectively, outpaced national, regional, and state returns
The group of lowest performing metros are a great example of how housing trends continue to differ market by market. While Ohio and Virginia are doing relatively well overall, markets like Columbus, Cincinnati, and Richmond lag behind top performers, though each has posted yearly growth.
And after coming in as one of the strongest 15 markets four times in 2012, Tampa landed on the list of lowest performing metros in October. Over the last year, the low tier segment has been a key growth driver for Tampa. But, losses of 5.3 percent over the last quarter in Tampa’s low price segment (homes selling for $62,000 and less) created a drag on the overall market’s quarterly gains of 1.5 percent. Additionally, Tampa’s REO saturation rose nearly one percentage point over the last quarter. While this market continues to see measured growth, it’s not on the same trajectory as other markets, like Atlanta.
Tampa is a great example of how seemingly small shifts in the status quo can disrupt the momentum of price gains. The housing recovery has been built upon the delicate balance between declining distressed sales and increased buyer activity. Until more of the middle class has access to credit, the recovery will be constrained.