The real estate market in March continued to ignore seasonal trends, now for the third straight month. According to our analysis, total inventory across the 38 major cities we track declined. As expected, the lack of homes on the market pushed the list price per square foot of those available upward.
2013 isn’t shaping up to be a particularly strong year for home buyers so far. In a normal market, inventory levels increase into the spring buying season. While this is bad news for home buyers, the lack of inventory benefits home sellers. Having fewer homes on the market increases buyer competition, and typically increases the value of homes.
Our analysis showed the list price per square foot in the areas we cover increased by 11.5 percent year-over-year. Normally, a home’s value increases at about the rate of inflation. In other words, 5 percent is considered a strong increase. With that in mind, an 11.5 percent increase is exceptional.
We examined 38 geographically diverse cities throughout the country, using data from the Multiple Listing Services associated with the city. This market report is the first to include data from four additional cities, as our previous analyses looked at only 34 cities. In the past month, we added housing data from Atlanta, Baltimore, Charleston, and Detroit.
To provide more detailed information, we examined inventory on a year-over-year basis and a month-over-month basis. Additionally, we analyzed the list price per square foot in the same manner. We’ll start with inventory.
Inventory Continues to Decline
Inventory fell across the the majority of the cities we track. Thirty-two of the 38 cities saw a decrease in inventory on a year-over-year basis; in total, inventory has declined by about 21 percent. At the end of March 2012 there were 124,808 homes on the market. One year later, this number has dropped to 98,336 homes.
As with last month, California cities saw major declines. The cities with the greatest decreases in inventory were:
- Oakland: Inventory in the home of the Raiders dropped by 81.1 percent. At the end of March 2013, there were 151 homes for sale, as opposed to 797 the year before.
- Sacramento: Sacramento’s inventory level dropped by 70.6 percent. In March 2012, there were 2,863 homes on the market. Over the past 12 months this number dropped to 843.
- Long Beach: The stock of homes for sale in Long Beach dropped by 51.3 percent. In March 2012, there were 844 homes on the market. Twelve months later there were 411 homes on the market.
In addition to a decrease of inventory on a year-over-year basis, inventory is down compared to both 2011 and 2010. Two years ago there were 181,402 homes on the market, while in 2010 there were 164,189 homes for sale. This represents a decrease of 51.5 percent and 35.4 percent, respectively.
Inventory: Month Over Month
On a monthly basis, inventory levels are still down. Compared to February, inventory also fell, another bad sign from potential home buyers. Still, the decrease was modest. In February there were 99,169 homes on the market. This figure dropped to 98,366 in March.
List Price Per Square Foot
Thirty of the 38 cities we track saw an increase in list price per square foot. Again, this was also on a year-over-year basis. In the past year the value of a home on a square foot basis increased by 11.5 percent. In March, our index showed homes cost $171 per square foot. The estimated value in 2012 was $151.
The three cities that saw the greatest increase in price per square foot were:
- Sacramento: The cost of a home on a square foot basis increased by 35.5 percent. Last year, homes were valued at $89 per square foot. By the end of March 2013, homes were valued at $138 per square foot.
- Atlanta: Atlanta saw the second-highest increase in price per square foot. In 12 months, the price jumped by $34, or 24.1 percent. A year ago, the price per square foot was $107. Since then the price has increased to $141.
- Los Angeles: Last month, the cost per square foot for an L.A. home was $378, up by 23.5 percent from the year prior. At the same time in 2012, homes were valued at $289 per square foot.
Compared to March 2011, the list price per square foot across the cities we track increased by 14.3 percent. At the time, homes in markets we track had value of $153 per square foot. When compared to data from 2010, there was little change. Three years ago, the list price per square foot was $175—just $4 more than it is today.
Price Per Square Foot Month Over Month
Our list price per square foot index indicates an increase in homes price in March compared to February. In February, our index showed the list price per square foot was $167; this increased to $171 in March.