Asking home price increases appear to be slowing down as mortgage interest rates inch upward, inventory expands, and investor interest wanes. Meanwhile, for the first time since 2011, asking prices outpaced rents, according to a real estate website.
Trulia.com reports nationwide asking home prices dipped 0.3 percent in July, the first month-over-month decline since November 2012. Seasonally adjusted, asking prices rose 3.3 percent quarter-over-quarter, down from a peak of 4.2 percent in April. Year-over-year asking prices are still up 11 percent nationally.
The Trulia report contains the latest findings from the Trulia Price Monitor and the Trulia Rent Monitor, based on the for-sale homes and rentals listed on the real estate website. The report indicates the quarterly asking home price gain was lower than in the previous quarter in 64 of 100 U.S. metros. The most apparent slowdown appears to be in the West Coast, where prices have rebounded strongly and appeared to be escalating too quickly during the last few months.
Asking home price gains dipped the most quarter-over-quarter in Las Vegas, Oakland, and San Francisco. The California metro areas of Sacramento, Ventura County, San Jose, and Fresno saw quarter-over-quarter increases slow by at least two percentage points between April and July. On the other hand, many metros in the South and Midwest are seeing price gains accelerate, such as Atlanta, up 3.2 percent and Detroit, up 3.7 percent.
"The biggest price slowdowns have come to some of the hottest local markets," observed Jed Kolko, Trulia's chief economist. "California and Nevada remain the Wild West for asking home prices, with some of the sharpest drops during the bust, strongest rebounds over the past year, and now biggest slowdowns in the past quarter. In the rest of the country, the ride is less wild, but is on the same track: price gains have cooled in almost two-thirds of the largest metros."
Trulia also indicated asking home prices continue to outpace rents in all major rental markets. This is the first time asking prices outpaced rents in the 25 largest rental markets since the real estate website started tracking rent trends in March 2011. Rents in July rose 3.9 percent nationwide compared to July of last year. While the increase is small compared to asking home price gains, this is considered a large increase when compared with inflation and income growth.
In San Jose, asking prices in July were up 4.5 percent quarter-over-quarter and 20.9 percent higher than in July 2012. The metro saw a year-over-year rent change of 5.3 percent. San Francisco asking home prices saw a quarterly gain of 3 percent and a year-over-year gain of 17.2 percent. July rents in that metro were up 8 percent from July 2012.
Carolyn Miller, president of the Silicon Valley Association of REALTORS®, said California led the housing market recovery and Silicon Valley was the state's "engine of job growth." "California's housing market has been able to rebound stronger and quicker than other parts of the country, especially in Silicon Valley, which has experienced an enormous job growth," said Miller. "For the last few months we saw a pent-up demand for homes and prices escalate quickly. We expect prices to level off as mortgage interest rates rise and most likely see a return of the market to a more normal pace if inventory continues to expand."
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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