If you're buying a home, you probably know that the real estate industry is rebounding across the country and that prices are increasing. "The U.S. housing market has clearly shifted to recovery mode over the past 18 months, with home prices consistently rising and foreclosures falling closer to pre-housing bubble levels," said Daren Blomquist, vice president at RealtyTrac.
However, this recovery has split regionally, with cities in California and upstate New York booming while other Northeast metros continue to languish.
Recovery Not Just About Home Prices
In RealtyTrac's first-ever Housing Market Recovery Index (MRI), the online housing data company calculated the index based on seven factors key to the health of a housing market:
- Unemployment rate.
- Percentage of underwater home loans.
- Percent change of foreclosure activity since the peak.
- Distressed sales percent of total sales.
- Institutional investors share of total sales.
- Cash purchases share of total sales.
- Median home price percent change since a market hit bottom.
RealtyTrac ranked 100 major U.S. metros in the study, but the company offers data for more than 900 metro areas nationwide. An MRI value of 100 is considered average for the US.
Housing price increases weren't the only factor in determining which markets were healthiest. For example, three California cities received some of the lowest scores despite above-average increases in home prices. Fresno, Visalia-Porterville, and Stockton have unemployment rates above 12 percent, and above-average percentages of underwater homeowners and distressed sales.
Here's how the top markets stacked up:
- Rochester, NY, housing MRI of 217
- Cape Coral, FL, housing MRI of 168
- Albany, NY, housing MRI of 168
- San Jose, CA, housing MRI of 166
- San Francisco, CA, housing MRI of 164.
Rochester topped the list of markets with the strongest signs of housing recovery thanks to below-average unemployment, underwater and distressed sales percentages, combined with above-average drops in foreclosure activity and increases in home prices.
In addition to California and New York, Colorado, Oklahoma, South Carolina and Wisconsin have two metros ranking among the top 20 markets.
Median home prices were on the rise in all 100 ranked markets, some more than others. Foreclosures have also peaked, even as some foreclosure inventories increased recently due to longer judicial foreclosure process laws. One of the most startling pieces of data about the housing recovery is the increase in the median price of homes since the bottom of the market in each area.
Nationally, home prices are up 19 percent over prices during the worst of the crash. With a 96 percent increase in home prices since the bottom, the San Francisco-Oakland-Fremont, CA market came out on top with home prices nearest to prices before the market crash. The housing recovery finds some upscale neighborhoods in the region have already surpassed the 100 percent increase level. Other top-ranked cities are:
- Rochester, NY, up 93 percent
- Cape Coral-Fort Myers, FL, up 82 percent
- San Jose-Sunnyvale-Santa Clara, CA (Silicon Valley), up 70 percent
- Albany-Schenectady-Troy, up 44 percent since the bottom of the market.
"Symptoms of the distress that plagued the housing market over the past seven years continue to linger, particularly in the form of a high percentage of underwater borrowers and distressed sales. This lingering distress is creating an uneven pace of recovery across different local markets," RealtyTrac's Blomquist added.
Metros with the lowest price gains include:
- Baltimore-Towson, MD, up 9 percent
- Allentown-Bethlehem-Easton, PA and NJ, up 9 percent
- Hagerstown-Martinsburg, MD and WV, up 13 percent
- Salem, OR, up 13 percent
- Wilmington, NC, up 13 percent
The cities with the worst MRI values are:
- Baltimore-Towson, MD, housing MRI of 80
- Allentown-Bethlehem-Easton, PA and NJ, housing MRI of 81
- Rockford, IL, housing MRI of 82
- Philadelphia-Camden-Wilmington, PA, NJ and DE, housing MRI of 83
- Hagerstown-Martinsburg, MD and WV, housing MRI of 85
- Colorado Springs, CO, housing MRI of 85
These cities are largely plagued by high unemployment, high inventories of distressed and under homes, and less participation by institutional buyers in their housing markets.