The news is largely upbeat for homeowners and landlords throughout the U.S., from CoreLogic’s Negative Equity analysis and Trulia’s Price Monitor and Rent Monitor reports for 2014.
First, a look at home sales trends indicated in a quarterly and year to year analysis. The steady price gains homeowners have witnessed over the last two years have begun to slow down, showing signs of a calmer increase rate of 8% (though still higher than the historical norm). For approximately 3.5 million homeowners, that steady increase meant their homes were finally pulled out from underwater for the first time since the late ‘00s crash. Great news for them, but another 1.2 million homeowners will still find themselves reaching up for a life preserver, which Trulia Chief Economist Jed Kolko says will eventually arrive, but at a slower rate than it has in the past two years. According to Kolko, prices are expected to continue to rise at about a 5% increase compared to the previous two years’ increases which in some cases soared to well over 20%.
The report further reveals that since May of this year, no U.S. market has seen a 20% or higher year-over-year price increase (as had been seen in many markets during the previous two years). Some markets reportedly experienced as much as 30 to 40% during the early recovery stage.
Some of the hardest hit markets such as those in the west, California (Oakland and Sacramento) and Nevada (Las Vegas) in particular will be most affected by the slow turn-around. Las Vegas, Sacramento and Oakland will now find themselves on the long-term recovery plan. as they have suffered the highest negative equity.
Many experts believe the stalled price increases are ultimately a good sign. Once again Trulia’s Jed Kolko: “Extreme price increases create unrealistic expectations, encourage flipping, and might discourage some owners from selling if they expect big increases to continue; at the same time, price declines push people into negative equity, raising the risk of default and foreclosure.”
In relation to home price declines, only four areas in the country were reportedly still seeing prices on the decline (El Paso, Hartford, Albany and Little Rock), which means that the national price slowdown has not had a significant impact overall.
Property managers and landlords will be delighted to know that rent prices, on the other hand, continue to be on the rise and are up 5.1% nationally year-over-year. Equally good news is that rents rose the highest in at least one of the same markets where home sale prices slowed (San Francisco, San Diego and Oakland).
California’s rental market is, of course, seeing the biggest rises with much-discussed San Francisco reaching the highest charted rent across the board at $3350 per month for a two bedroom. New York’s rent comes in immediately behind San Francisco.
Overall, rents in the U.S. have been on the rise for the past several years and are expected to remain high for some time – excellent news for property managers and landlords.
Have you seen rents and real estate values steadily rising in your market?