Trulia (NYSE: TRLA) today released the latest findings from the Trulia Price Monitor and the Trulia Rent Monitor, the earliest leading indicators available of trends in home prices and rents. Based on the for-sale homes and rentals listed on Trulia, these monitors take into account changes in the mix of listed homes and reflect trends in prices and rents for similar homes in similar neighborhoods through January 31, 2013. Rising Asking Prices Signal Strong Price Recovery Indicating the strength of the home price recovery, asking prices rose 0.3 percent quarter-over-quarter (Q-o-Q) in January without seasonal adjustment—despite the fact that prices typically fall during the wintertime. Seasonally adjusted, prices rose 2.2 percent Q-o-Q. Moreover, prices rose 0.9 percent month-over-month (M-o-M), the highest monthly gain since the price recovery began. Year-over-year (Y-o-Y), prices rose 5.9 percent; excluding foreclosures, prices rose 6.5 percent.
Booming Housing Markets Have Both Price Gains and Healthy Fundamentals Healthy housing markets are defined by strong job growth, low vacancy rates, and low foreclosure inventory. In “booming” markets such as San Francisco and Seattle, rising asking prices are supported by strong job growth and are 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.
New Construction Eases Rent Gains Nationally With more newly-constructed multi-unit buildings coming to completion, 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 only 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 it’s nearly all in multi-unit buildings.
|January 2013 Trulia Price Monitor Summary|
|% change inasking prices||# of 100 largestmetros with asking-price increases||% change in askingprices, excluding foreclosures|
|Month-over-month,seasonally adjusted||0.9%||Not reported||1.2%|
|BOOMING Big price increases and healthier market fundamentals.|
|HUMMING Stronger market fundamentals without dramatic price gains.|
|REBOUNDING Big price increases, but weaker market fundamentals.|
|STRUGGLING Neither strong market fundamentals nor big price gains.|
|Where Rent Gains Slowed Down Most|
|#||U.S. Metro||% Change in Rents, Y-o-Y, Jan 2013||% Change in Rents, Y-o-Y, July 2012||Percentage Point Difference|
|1||San Francisco, CA||2.4%||11.5%||-9.1%|
|5||San Diego, CA||2.0%||4.4%||-2.4%|
|NOTE: Among largest 25 rental markets. All figures are rounded, and differences (rightmost column) were calculated before rounding, so some differences shown may not equal the difference of the rounded values.|
- “In many local markets today, dramatic price gains can mask serious red flags,” says Jed Kolko, Trulia’s Chief Economist. “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.”
- “Rent gains are slowing down because of more supply, not less demand,” explains Jed Kolko, Trulia’s Chief Economist. “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.”
- To read the full report, see here.
- To download the full list of price and rent changes for the largest metro areas, see here.
- To download a graph of price changes from January 2011 to January 2013, see here.
- To download a scatter plot graph contrasting price trends with the market's health for the 100 largest metros, see here.