Best Markets for Home Values

by Steve CookAugust 31, 2018

Equity is like a pot of gold at the end of the rainbow for homeowners. It’s the money that owners gain over time as they pay off their mortgage debt and as rising values make their homes more valuable.

You can calculate your home’s equity by subtracting the amount of principal you still owe on your home mortgage from the value of your home. You can find the current balance owed on your monthly statement and you can get a good idea of your home’s current value by using Homes.com’s value estimator.

Home values don’t always rise, as millions of homeowners found out a decade ago. When values fell so low that their homes were worth less than their mortgages, homeowners were in a state of “negative equity.” Without a cushion of equity to protect them, owners became very vulnerable to foreclosure, and 40 million families lost their homes.

Today, real estate economic conditions resemble the boom that preceded the housing bust. Demand from first-time buyers is extremely strong. Inventories of homes for sale have declined for three years, pushing up prices at a rate far faster than normal as demand exceeds supply. Last year, prices surpassed the previous peak reached in 2006 and continue to rise.

Median home prices, 2000 to 2018:

Source:  S&P/Case-Shiller 20-city Composite Index, Seasonally Adjusted

This year soaring prices have put homeownership out of reach for millions of first-time buyers, at least for now. Home sales fell for fourth straight months in the spring and summer as supply and demand seek a new equilibrium.

There’s a popular saying in real estate: “All real estate is local.”  If you are looking at market conditions in a variety of markets, you will find that values appreciate at different rates in different markets. The inventory shortage in San Francisco, for example, has been underway for several years. High demand erased inventory and drove up prices. Even as higher prices encouraged owners to sell, new listings were gobbled up in a few days. Eventually, prices became unaffordable, demand fell, homes took longer to sell, and sales hit a plateau. Flat sales flattened prices. Inventories now are improving; prices are finally stabilizing.

Different markets are at different places in this equation, but by figuring out where they are, you should be able to predict what will happen next to prices.

July 2018 Market Data:

Market Median Price Price Trend Supply Trend New Lists Days on Market Outlook
Sacramento, CA $469,050 -2% +11% 0 +9% Prices falling
Denver, CO $490,047 0 +77% -5% +3% Prices stabilizing
Orlando, FL $339,050 -1% -2% -4% -13% Prices still rising
Seattle, WA $599,055 0 +25% +3% +3% Prices stabilizing
Nashville, TN $374,559 0 +19% +20% -2% Prices falling
New York, NY $519,000 0 -1% +9% -9% Prices rising
Washington, DC $499,950 -3% +22% +11% -10% Prices falling
Boston, MA $534,959 -3% +3% +13% -8% Prices stabilizing
Charlotte, NC $350,050 -3% -5% -2% -8% Prices still rising
Atlanta, GA $338,550 -2% -9% +2% +11% Prices falling
Virginia Beach, VA $309,950 0 +16% +11% 0 Prices falling
Jacksonville, FL $319,550 -2% +11% +11% 0 Prices falling
Grand Rapids, MI $288,950 -1% -10% +3% -10% Prices rising
Charleston, SC $375,050 -2% -11% -4% 0 Prices stabilizing
San Francisco, CA $1,000,015 -10% +13% +3% -9% Prices falling

Source: NAR

Key

  • Price trend is a month over month change in median price
  • Supply trend is year over the change in active listings
  • New lists are year over year change in new listings
  • Days on market is year over year change in days from listing to contract

Our data illustrates how major change is underway in larger markets across the country as demand slows and prices begin to stabilize and even fall.

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About The Author
Steve Cook
Steve Cook is editor and co-publisher of Real Estate Economy Watch. He is a member of the board of the National Association of Real Estate Editors and writes for several leading Web sites, including Inman News. From 1999 to 2007 he was vice president for public affairs at the National Association of Realtors.