May 8th, 2012 3:20 PM by Eileen Denhard
One month ago, we introduced the Trulia Price Monitor and Trulia Rent Monitor as the earliest leading indicators of how asking prices and rents are trending nationally and locally. So what happened to prices and rents in April?
Nationally, housing prices have bottomed and are on the rise. Asking prices on for-sale homes were 1.9% higher in April than one quarter ago. A 0.5% month-over-month rise in April, on top of month-over-month price increases in March and February, makes for three months in a row of rising asking prices, after adjusting for typical seasonal trends. In fact, prices have been stable or rising for the past eight months, except for a dip in December 2011. This marks a new milestone: asking prices were 0.2% higher in April than a year ago. Before April, prices were still falling year-over-year.
Not only are rising prices starting to look like a real trend: they’re also coming to a market near you — if they haven’t already. Asking prices increased year-over-year in 44 out of the 100 largest metropolitan areas, with Miami and Phoenix leading the charge.
Why these markets? One factor is job growth, which boosts housing demand. Miami, Phoenix, Warren-Troy-Farmington Hills (suburban Detroit) and Denver all saw strong employment gains in the past year. Another factor is the big price declines after the bubble, which attracted house hunters and investors searching for bargains to those markets. Most of the metros with the largest price increases in the last year had huge price declines during the bust, including Phoenix, Warren-Troy-Farmington Hills and the four Florida metros in the top ten. But among the metros with the largest price declines over the past year, only three–Sacramento, Las Vegas and Fresno–had huge overall price drops after the bubble burst.
Note: Rankings based on the year-over-year changes in asking price among the 100 largest U.S. metropolitan areas.
Seattleites, take heart: in the most recent quarter, most of the metros with year-over-over price declines have turned around. Prices rose quarter over quarter in 92 of the 100 largest metros, including in Seattle, Las Vegas and Atlanta.
Rental demand remains strong, with rents rising 5.6% nationally year over year. One reason for this continuous climb is job growth, as the metros with the largest rent increases tend to have fast job growth, like San Francisco and San Jose. But another reason why rents keep going up is the decline in homeownership: foreclosures forced some owners to become renters, while tight credit and the weak job market put homeownership out of reach for many others. The result: rents have risen even while prices were falling, and now that prices are rising, rents are rising even faster.
Note: Rankings based on the year-over-year changes in asking rents among the largest U.S. metropolitan areas.
Even within a metro area, neighborhoods have their own price and rent trends. This month we looked at trends within five large metros: New York, Los Angeles, Chicago, Washington DC and the San Francisco Bay Area.
In the New York area, prices rose year over year in Brooklyn, Manhattan and Staten Island, while declining in the rest of the region. But rents rose everywhere – both in the City and suburban areas.
Note: In these tables, asterisks (*) denote areas where sample sizes are too small to report year-over-year changes in rents.
In Los Angeles, asking prices increased only in the downtown area. Prices fell elsewhere throughout the region, most of all in Long Beach. As in New York, though, rents rose throughout the region, except for Long Beach, with downtown LA experiencing both the biggest increases in prices and rents.
In Chicago, asking prices fell in all areas, but the northern and southern suburbs fared worst.
In the Washington DC area, prices rose throughout the region, though least in Prince George’s County, MD.
Note: Fairfax county includes Falls Church and Fairfax cities. Prince William county includes Manassas and Manassas Park cities.
Finally, in the San Francisco Bay Area, rents were on a tear, rising more than 10% in San Francisco itself, San Mateo county and Alameda county. But asking prices were up in San Francisco while down in Oakland.
What patterns emerge? Among these large metros, the most central urban areas tend to have larger price increases (or smaller declines) than suburban areas, but there are exceptions – and there’s no general pattern across the US overall. In the Atlanta region, prices year on year were down less (-2.9%) in Atlanta (404 area code) than in the suburban areas (-5.5%, outside the 404 area code). However, in the Seattle region, prices year on year were down more (-6.6%) in Seattle itself (206 area code) – than on the Eastside (-5.2%, 425 area code). But what the quarter-over-quarter trend tells us is that it’s going to get harder to find neighborhoods where prices are declining.
Will the rise in asking prices and rents continue next month? Check back in on Tuesday, June 5, 2012 at 10AM ET to find out when we release the findings from May.
How did we put this report together? To recap the methodology, the Trulia Price Monitor and the Trulia Rent Monitor track asking home prices and rents on a monthly basis, adjusting for the changing composition of listed homes. The Trulia Price Monitor also accounts for the regular seasonal fluctuations in asking prices in order to reveal the underlying trend in prices. The Monitors can detect price movements at least three months before the major sales-price indexes do. Last month’s post explains how the Monitors compare with other price indexes out there, and our FAQs provide all the technical details.