Analysts agree that the U.S. housing recovery is still progressing, but not all places are enjoying the same market performance. While some areas are experiencing more foreclosures and falling prices more and more are starting to see positive numbers. A recent report from RealtyTrac shows that the country’s housing recovery averages are being driven by a handful of cities that are outperforming the rest. Perhaps surprisingly, San Francisco came in fifth place on the last, surpassed by cities like San Jose in California and Albany, Schenectady and Rochester in New York. For more on this continue reading the following article from TheStreet.
America’s most-painful housing bust in history appears to be history itself — and here’s a look at five markets that are leading the way in today’s nascent rebound.
"If you’re looking for a strong market that’s going to perform well going forward, I think you’ll do well in any of these," says Daren Blomquist of market watcher RealtyTrac, which recently named the top Markets Leading the Housing Recovery.
RealtyTrac compiled its list by analyzing 100 of America’s largest housing markets for seven factors, from how many homes institutional investors are buying to how high prices have rebounded from the bust’s depths.
Blomquist says the locales at the top of the rankings either never had big foreclosure problems or have managed to clear most distressed properties out of their housing "pipelines."
Many winners are also in or near California’s booming Silicon Valley or — more surprisingly — upstate New York.
Blomquist says that while New York’s western and central region have long had reputations for sluggish economies, upstate cities that made RealtyTrac’s list actually have lower jobless rates than the U.S. average. "Even though these cities may not have robust economies, their unemployment levels are performing better than the nation’s," he says.
Click below to check out the five metro areas that scored the best on RealtyTrac’s rankings. (A score of 100 equals the national average for all factors analyzed.)
All figures are as of June 30 and cover the 100 most-populous U.S. metro areas, except for cities in states where public property records don’t include sale prices.
Home-price numbers refer to median sale prices for houses, condos and townhouses, while "underwater" levels refer to how many homeowners whose properties aren’t paid off owe more on their mortgages than their residences are worth.
Fifth place: San Francisco
Score: 163.9 (100 = U.S. average)
A shortage of buildable land, a surplus of people who want to live there and lots of jobs in nearby Silicon Valley are all helping San Francisco’s housing market recover soundly.
"San Francisco is a consistently well-performing market because it’s got limited space to build and it’s a very highly desirable location," Blomquist says.
The metro area’s $550,000 median home price is still well below a $702,000 peak hit in 2007, but has risen 96% — the biggest percentage gain for any city studied — after bottoming out at $280,000 in 2009.
Foreclosure filings have also tumbled 88% from their worst levels, while just 17% of San Francisco homeowners are "underwater." That’s well below America’s 26% underwater rate nationwide.
San Francisco’s 6.5% jobless rate is also more than one percentage point below the national average, which stood at 7.6% as of June.
Fourth place: San Jose, Calif.
Silicon Valley’s unofficial capital is seeing its housing market outperform the U.S. average in every measure studied.
For instance, San Jose’s foreclosure filings have dropped 90%, while median prices have rebounded 70% from the market’s $370,000 bottom to reach $630,000.
The metro area is also enjoying a better-than-average 6.9% unemployment rate, while just 9% of local homeowners are underwater.
Blomquist attributes San Jose’s rebound to Silicon Valley’s successful tech companies — and to the stock options that most firms give their employees.
"The Facebook (FB) initial public offering [in 2012] is a prime example of a situation where a bunch of millionaires were created overnight and were probably interested in buying houses," he says.
Third place: Albany/Schenectady, N.Y.
New York’s capital scored surprisingly well on RealtyTrac’s analysis thanks to a 6.4% jobless rate — the lowest of any metro area in the top five.
"Even though Albany isn’t known for a booming economy, its relatively low unemployment is helping to sustain the local housing market," Blomquist says.
Foreclosure filings have dropped 63% from their worst levels, while just 9% of Albany homeowners are underwater — the same low level found in red-hot San Jose. Albany’s median home prices have also rebounded 44% from a $126,000 bottom in 2005 to hit $182,000.
Second place: Cape Coral/Fort Myers, Fla.
Cape Coral had America’s highest foreclosure rate during part of the housing bust, but Blomquist says the community has "bounced back more strongly than any other metro area in [hard-hit] Florida."
Foreclosure filings have dropped 91%, while median prices have rebounded 82% from their $74,900 trough to reach $136,500.
RealtyTrac also found that 70% of buyers are buying places with all cash (i.e., no mortgage) — typically a sign of deals involving out-of-town or even non-U.S. investors.
"Cape Coral is one of those markets that are very attractive to out-of-state investors and buyers," Blomquist says. "As soon as there was evidence that the market had hit bottom, you saw a lot of investors rush back in."
First place: Rochester, N.Y.
This upstate New York community has been known in recent years for a struggling economy, but still takes RealtyTrac’s crown for the No. 1 metro area leading America’s housing recovery.
Blomquist says Rochester’s housing market "did not fall apart as badly as some cities did during the housing slump, so it hasn’t had as far to recover."
RealtyTrac found that the Flower City’s median home prices have risen 93%, to $123,000, after bottoming out at just $63,697 in February 2007.
Foreclosure filings have also dropped 68%, while only 7% of Rochester homeowners are underwater. Another plus: The metro area’s 7% jobless rate is also below the U.S. average.
This article was republished with permission from TheStreet.