The housing market recovery is well underway, but the strength of that recovery varies greatly across the country, according to a new analysis by the real estate data firm RealtyTrac.
A look at 100 major U.S. metropolitan areas found that median home prices have bottomed out and begun rising in all of them, but that underlying weaknesses in some of them is producing an uneven recovery across the nation.
Housing "in recovery mode"
"The U.S. housing market has clearly shifted to recovery mode over the past 18 months, with home prices consistently rising and foreclosures falling closer to pre-housing bubble levels," said Daren Blomquist, vice president at RealtyTrac. "Still symptoms of the distress that plagued the housing market over the past seven years continue to linger, particularly in the form of a high percentage of underwater borrowers and distressed sales."
The company examined a variety of factors that affect local real estate markets, including unemployment rates, percentages of underwater mortgages, distressed home sales and gains in median home prices, to produce a "recovery index" reflecting the current state of the 100 major markets, plus that of 800 smaller communities.
The strongest major markets were found to be in upstate New York, southwest Florida and the Bay Area of Northern California, while the weakest conditions were seen in northern Maryland, southeast Pennsylvania and downstate Illinois. Rochester, N.Y. led the list with the strongest housing market among major metropolitan areas, while Baltimore, Md. had the lowest index score.
The relative strength and weaknesses of markets was more of a local that a regional matter. California, Florida, Pennsylvania and Colorado all had major communities at both the top and bottom of the list.
Investor demand a positive sign
Investor demand was seen as a key factor in supporting the strength of a local real estate market. Strong demand for investors and a high percentage of cash sales helped push the Cape Coral -Fort Myers, Fla. market to the #2 spot on the list, despite an uncommonly large share of underwater mortgages and distressed home sales. Strong price gains were also a factor in that market.
Meanwhile, three California cities were rated among the markets with the weakest fundamentals despite higher-than average price increases. Fresno, Visalia-Porterville, and Stockton were all marked down for having unemployment rates in excess of 12 percent, as well as high rates of underwater mortgages and distressed home sales.