Trulia ranks struggling vs. booming cities
According to the latest Trulia Price Monitor and Trulia Rent Monitor, asking prices rose 0.3 percent quarter-over-quarter in January, “despite the fact that prices typically fall during the wintertime,” adding that seasonally adjusted, they actually rose 2.2 percent. Asking prices rose 5.9 percent over the year, including foreclosures, and rose 0.9 percent in January compared to December, marking the highest monthly gain since the price recovery began.
As prices rise, Trulia has mapped which markets are booming, rebounding, humming, or struggling, naming San Francisco, Seattle, San Jose, Denver, and Salt Lake City as the nation’s top performers.
“In many local markets today, dramatic price gains can mask serious red flags,” Dr. Jed Kolko, Trulia’s Chief Economist said in a statement. “Strong job growth, low vacancy rate, and low foreclosure inventory–not huge price gains–are signs of a healthy housing market. Without strong underlying market fundamentals, price rebounds might be here today, but gone tomorrow.”
The company notes that in “booming” markets such as San Francisco and Seattle, rising asking prices are supported by strong job growth and unthreatened by future foreclosures. However, investor-fueled price increases in “rebounding” markets like Phoenix and Las Vegas are at risk from slow job growth, high vacancies, or future foreclosures. At the other end of the spectrum, healthy markets without dramatic price gains, such as Houston, will continue to hum along after avoiding the worst of the housing bubble and bust. Meanwhile, markets like Chicago continue to struggle without strong market fundamentals or big price gains.
Trulia Rent Monitor shows rising rents easing
Regarding rents, new construction has eased rising rents, and rent gains fell behind asking price increases at the national level for the first time since the price recovery began last spring. In January, rents rose 4.1 percent Y-o-Y nationally, slowing down from 4.7 percent in July 2012.
Regionally, rent gains cooled the most in San Francisco, where rents rose 2.4 percent versus 11.5 percent in July 2012. According to the Census, construction activity in San Francisco has been well above normal for the last year, and nearly all in multi-unit buildings.
“Rent gains are slowing down because of more supply, not less demand,” explains Dr. Kolko. “Many of the multi-unit buildings that have been under construction over the past two years are now coming onto the market. Renters in San Francisco, Seattle, and Denver are starting to get a touch of relief, even though rising prices might put homeownership out of their reach.”