Home Prices Surge in Cities With Strong Job Growth: Trulia
NEW YORK (TheStreet) -- Job growth, not just investor demand, is boosting home prices, according to Trulia's Chief Economist Jed Kolko.
According to Trulia's Price Monitor, asking home prices, a leading indicator of sales price, rose 8.3% year-over-year in April. The index adjusts for seasonality and for the mix of homes sold.
Prices were up 4.3% quarter-over-quarter and 1.3% month-over-month on a seasonally adjusted basis.
Excluding distressed sales, prices rose 9.3% year-over-year.Earlier Tuesday, CoreLogic said its Home Price Index gained 10.5% in March and its Pending HPI projected 9.6% year-over-year gains in April.
The more striking data from Trulia's report highlighted the impact of job growth on home prices. Asking prices leaped the most in cities where the jobs market is booming, suggesting underlying fundamentals behind the housing recovery are strengthening. "Strong job growth and the housing recovery go hand-in-hand," the report said. "Nationally, job growth increased 1.5 percent Y-o-Y in March. In San Jose, Orange County, San Francisco, and Phoenix -- where asking prices rose more than 18 percent Y-o-Y -- job growth was well above the national average. In fact, only the Detroit suburb of Warren-Troy-Farmington Hills, MI was among the list of top 10 markets with the highest price gains without above average job growth." Meanwhile rents rose 2.4% nationally, the pace of rent growth has slowed, which is good news for renters who are still unable to afford homes. In the cities of San Francisco, Las Vegas, Sacramento and Seattle, rents are declining even though home prices are increasing at a scorching pace.
The housing recovery is welcome news for sellers waiting on the sidelines and underwater homeowners waiting for a recovery. But it has its share of skeptics. The most cited argument is that the housing recovery is being driven by investor demand, with most first-time home buyers still largely cut off from the market due to tight mortgage credit conditions. Still, recent reports show that buyers are in fact, fueling the housing demand, not investors.. According to the Campbell/Inside Mortgage Finance Survey released last week, investors accounted for just 21.8% of home sales in March. Investors accounted for only 13% of sales of non-distressed properties, the largest segment of the market. Current homeowners had a 50% market share and first-time homebuyers a 37% share of the non-distressed housing market.
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