The most recent trend of decreasing-to-flat housing stock and an increase in the median list price per square foot continued in April, marking the fourth straight month the real estate market has spurred seasonal trends. According to our analysis, 32 of the 38 cities we track saw a decrease in inventory on a year-over-year basis, while 30 of the 38 cities saw an increase in median list price per square foot on a year-over-year basis.
As we’ve said in the past, this combination indicates a seller’s market, as fewer homes on the market increases home buyer competition and helps drive up listing prices. While the warmer months of the year are traditionally the most active for the real estate market, our analysis showed that 2013, so far, has gone against the grain. Our assumption is that current homeowners and investors are waiting for home prices to increase before they attempt to sell—to the detriment of first-time home buyers.
Our monthly State of the Market reports looks at 38 geographically diverse cities throughout the country. We examine each city’s median list price per square foot and inventory level. The data we collect is used to gauge the current real estate market through the creation of a price per square foot index and a tabulation of total inventory level. Our data comes from the Multiple Listing Service.
Median List Price Per Square Foot
The median list price per square foot across the cities we track is up on both a year-over-year basis and a month-over-month basis.
Price Per Square Foot: Year-Over-Year
In April 2013, the median list price per square foot increased by 13.2 percent, reaching $174. Just 12 months prior, it rested at $153. This is a significant leap as home prices typically increase by 3 to 5 percent in a given year.
Of the 38 major cities we track, 30 saw an increase in the list price per square foot. These cities saw the greatest increase:
- Sacramento: Sac-Town saw a dramatic increase of 61.1 percent compared to the same time in 2012. Today, the cost for a home on a square foot basis is $145. Just 12 months ago this figure was only $90. The large increase in cost can be attributed to the city’s lack of housing inventory, which we detail below.
- Los Angeles: The City of Angels witnessed an increase of 40.7 percent, from $295 in 2012 to $415 in 2013.
- Mesa: In the past year, the price per square foot in Mesa increased by 28 percent or $23. In 2012, homes in the area were valued at $82 per square foot; today they are valued at $105 per square foot.
At the other end of the spectrum, Chicago had the greatest decrease by far in cost on a per square foot basis. In April 2013, Chicago homes were valued at $146, down from $166 in 2012; this is a decrease of 12 percent.
Price Per Square Foot: Multi-Year Comparison
Our multi-year comparison shows that prices have increased for the past two years; however, the overall price per square foot is lower than in 2010. Since 2012, the price per square foot for a home has increased by $12, from $153 to today’s price. Compared to two years ago, the increase was slightly more pronounced at $13. Still, things aren’t as good as they were in 2010 when our index priced homes at $176 per square foot.
Price Per Square Foot: Month-Over-Month
According to our list price index, home prices increased by $3 per square foot since March, up from $171 per square foot. This increase continued a nine-month trend in which the median list price per square foot had trended upward. Since July 2012 homes prices have increased from $150 to $174, with only a slight dip in price that occurred in December 2012.
Inventory Level
In 32 out of 38 cities, inventory decreased on a year-over-year basis. However, there was a very slight increase in the total number of homes on the market on a month-over-month basis.
Inventory Level: Year-Over-Year
Across the 38 states we cover, inventory dropped by 24,019 homes or 19.4 percent year-over-year. This time last year, there were 123,648 homes on the market, while today there are a scant 99,629.
These cities saw the greatest change:
- Oakland: In the past year, inventory levels dropped by 79.3 percent. In 2012 there were 720 homes on the market—already a low figure, while today there are just 149 homes available to home buyers.
- Sacramento: Sac-Town’s inventory level decreased by 66.5 percent in the last 12 months. In April 2012 there were 2,750 homes on the market; a year later there were 920 homes for sale.
- Long Beach: Long Beach saw a decrease of 54.7 percent. In April there were 1,830 fewer homes on the market than during the same time the previous year. In April 2013 there were 780 homes for sale, while last month there were 920 homes on the market.
Still, there are bright spots where inventory levels increased. These cities saw the greatest increase in homes for sale:
- Baltimore: Today there are 1,292 more homes on the market than during the same time last year. This is 34.7 percent increase. In 2012, there were 3,719 homes on the market, while in 2013 there were 5,011 homes for sale.
- Miami: April ended with 1,062 more homes on the market than during the same time the previous year. This is a 19 percent increase in the number of available homes on the market. In 2012, there were 5,576 homes for sale; in 2013 there were 6,638 homes on the market.
- Colorado Springs: With just 152 homes on the market in Colorado Springs, home buyers are already hurting. Still, this is number is up from 133 homes the year before. This is a 14.3 percent increase compared to the same time one year ago.
Inventory Level: Multi-Year Comparison
When compared to the same time in both 2011 and 2010, there are significantly fewer homes on the market. In 2011, there were 180,772 homes on the market; in 2010 there were 171,823 available properties.
Inventory Level: Month-Over-Month
Compared to March, there was a slight increase in the number of houses available to home buyers. In April there were 99,629 homes on the market, compared to 98,336 in March. This continues a five-month trend in which the housing level remained relatively flat.
Inventory Levels: Point of Interest
Our data indicates that Miami’s housing market is stabilizing. In the past year, Miami’s inventory and home price per square foot increased. As mentioned above, Miami’s inventory increased by 19 percent. At the same time, the price per square foot increased from $148 to $153 in the past year. This is a modest (and welcome) 3.3 percent increase.
Seller’s Market
Our data indicates that it is currently a seller’s market in the majority of the cities we analyze. Depending on whether you are a homeowner looking to sell or a home buyer this is good or bad news. Unless enough homes come onto the market during the spring buying season, home buyers can expect to see inflated prices.
Correction: An earlier version of our $/sqft index contained an incorrect calculation for % change. The numbers have been revised in the table and within the article.
