The major storyline of 2012 was that inventory drastically fell throughout the year, and as a result the median price per square foot for homes increased steadily.
According to Movoto Real Estate data, throughout 2012 there was a steady decline in the number of homes on the market. By December, inventory declined 27% from the same month of the previous year for our 35 city sample.
Typically, the market follows a seasonal pattern. The number of available homes rises in January and reaches a high point during the late summer and early fall. Inventory drops during the colder months of the year, reaching a low point in December. In 2012, inventory pretty much only went done.
During the final month of 2012, inventory dropped by 9,551 homes, or by about 9 percent. At the end of November there were 105,077 homes available, while in December there were 95,526. For comparison, in 2011 inventory dropped by about 8 percent between November and December. In 2010, inventory dropped by about 5 percent between November and December.
Why was there a lack of inventory? Homeowners have been reluctant to sell their homes, either because they are underwater or they believe prices will continue to increase. In addition, there has been an increase in investor demand coupled with a decrease in bank foreclosures.
When these factors are viewed together, they help explain why home prices in 2012 climbed upward.
Median Price Per Square Foot
Prices are up about 10% year-over-year for our 35 city sample.
Normally, the median price per square foot reaches its annual high point in the warmer months, the peak season of the housing industry. For example, in April 2011 the median price per square foot topped out at $180, and in June 2010 this figure reached $161 before falling. In 2012 the median price per square foot reached $172 in November.
What was the cause of this price increase? As we mentioned above, the biggest reason for the price increase is simply the fact that there are fewer homes available now than in both 2011 and 2010. This led to an increase in home-buyer competition for what limited inventory remains.
Unless this trends changes, in 2013 the housing market will continue to see more of the same–fewer, more expensive homes on the market.
Las Vegas Tops List of Best Places to Sell a Home
Sin City moved up three spots to take the No. 1 position because of an increase in the price per square foot of homes. In December the median price per square foot for a home was $344, an increase of about 28 percent compared to the same time in 2011.
Meanwhile, San Diego climbed up the ranks thanks to a significant change in the number of days a home remained on market. In December a home in San Diego sold in 51 days, which represents about a 29 percent decrease in time compared to the same period a year ago.
Rounding out the top three is Phoenix. The Valley of the Sun remains a strong area for home sellers, but the city fell one spot because of gains made by Las Vegas and San Diego.
Overall, the makeup of the top-10 list remained relatively stable compared to Fresno, which climbed from the 12th position to the sixth.
The Top Ten Cities For Sellers:
SpotProperty’s analysis examines some of the country’s largest cities to determine the top areas for home sellers. The metric uses a combination of market statistics, which includes a city’s median list price and median days on market.
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