The interaction of supply and demand yields a price that clears the market place assuming there are no impediments. If supply increases and demand does not, prices decline. If demand increases and supply does not, prices rise. The interaction of supply and demand is the fundamental basis of economics.
As demand for U.S. housing continues to rise, prices accordingly are escalating. In the first five months of 2016, the National Association of Realtors® reported that the number of sales of existing homes rose to 2.033 million from 1.925 million a year ago in the same period, a gain of 5.61 percent. Correspondingly, the average of the median prices increased by 5.68 percent, rising from $211,560 to $223,580.
Once again I invoke the TINSTAANREM clause — There Is No Such Thing As A National Real Estate Market. Each real estate market is different. Ditto the respective economies.
More important than how much prices have risen in the past is what are prices going to do the in the future. To gauge what are going to be the top-performing home price markets, Clear Capital utilizes “patent-pending rolling quarter intervals” that compare the most recent four months to the previous three months. Think of a 12-month moving average but with fewer months – hopefully detecting trends quicker than the year-long comparison. Clear Capital analyzed not just the U.S., but also regional markets and the top-50 Metropolitan Statistical Areas (MSAs).
Given this analysis, what are the top markets as far as forecast year-over year gains that we will see at the end of 2016? The top-10 are included in the following table. In addition to Clear Capital’s data, also added are the job growth rates for the latest 12 months.
Just one of these top-10 markets posted a job growth rate less than that of the U.S. (which was 1.69 percent, preliminary, for the 12-months ending May 2016). Cleveland came in at 1 percent (0.99 percent to be exact).
Want to see all of the 50 major MSA’s respective past and forecast price performance? Click https://www.clearcapital.com/newsroom/market-reports/american-south-new-region-watch/.
While none of the markets are anticipated to have as strong price growth in the coming 12 months as reported in the past 12-months, each of these top-10 markets are showing the impact of demand exceeding supply.
If you wish to see the latest median prices for most of the U.S. MSAs, go to NAR’s data for the past three years and latest five quarters by clicking http://www.realtor.org/topics/metropolitan-median-area-prices-and-affordability. Once there, you can look at both single family and condominium price series.
The great June U.S. jobs report, coupled with falling interest rates due to BREXIT and rising rental rates sets the stage for ongoing price increases in most U.S. markets.
Ted