Most Housing Markets with Biggest Price Gains Aren’t Healthy
Should we all envy Phoenix, where prices have risen 24.8% year-over-year? Probably not. Huge price gains in Phoenix and elsewhere are not necessarily a healthy sign. As part of our 2013 housing outlook, we ranked the 100 largest metros on the health of their housing markets, based on three market fundamentals: strong job growth, low vacancy rate, and low foreclosure inventory. On this list of healthiest markets, Houston ranked #1.
Weaknesses on these fundamentals are red flags for a local housing market – even when prices are galloping ahead. Few of the markets with the biggest price gains are “healthy” in terms of these fundamentals: eight of the 10 top price gainers were in the bottom half of the “healthy markets” ranking. For example, Detroit – despite a 14.2% price increase – was dead last, ranked 100 out of 100. None of the 10 markets with the largest price gains was also among the top 10 healthiest markets for 2013, though San Francisco came close, with the 11th largest price increase and the 2nd healthiest market.