Realtor.com’s Top Turnaround Towns for the Third Quarter of 2012
In the third quarter 2012, the nation’s real estate turnaround continued its movement to Western states. Realtor.com data also shows the recovery is both accelerating and broadening to reach more markets. In Q3 2012, the nation saw a reduction in median age of inventory of -13.89%, as well as a year-over-year reduction in inventory of -8.51%. National median list prices also increased slightly at 2.54% year-over-year during the third quarter.
The West continues to be the dominant region in the current housing turnaround, a transition from the Florida–based turnaround in 2011. This quarter, nine of the Top 10 Turnaround Towns can be found in Western states and seven of the top ten are located in California. All the markets included in the top ten this quarter have histories of high volume foreclosures and dramatic price declines.
For the first time, Oakland led the nation, replacing Phoenix-Mesa as the Top Turnaround Town. Three California cities, Sacramento, San Jose and San Francisco, are also in the top five. Seattle-Bellevue-Everett ranked fifth, moving up from sixth place in the second quarter, while Bakersfield, CA moved up one spot to sixth this quarter. Santa Barbara moved up to seventh place from tenth in the second quarter. Phoenix-Mesa, Fresno and Miami rounded out the top ten.
|Q3 2012 Rank||MSA||Year/ Year Quarterly Change in Median List Price||Year/ Year Quarterly Change in Median Age of Inventory||Year/ Year Quarterly Change in Inventory||Q2 2012 Rank||Q1 2012 Rank||Unemployment rate (August 2012)|
|3||San Jose, CA||15.26%||-32.39%||-41.61%||5||24||8.5%|
|4||San Francisco, CA||14.80%||-35.71%||-39.63%||8||51||8.2%|
|7||Santa Barbara-Santa Maria-Lompoc, CA||25.05%||-22.92%||-33.62%||10||114||7.6%|
*Unemployment figures were pulled from the Bureau of Labor Statistics August 2012 data
1. Oakland, CA leads the Realtor.com Top Turnaround Report rising from #2 in Q2 2012, partially due to its improving unemployment rate of 8.2%, far below California’s 10.4%. Oakland’s inventory of 3,211 homes in Q3 2012 was down -58.31% year-over-year. Median age of inventory has drastically improved from Q3 2011, down -63.46% from 52 days to 19 days. The September 2012 foreclosure rate of 1 in every 369 housing units is slightly better than California’s rate of 1 in every 361, another positive indicator for Oakland.
2. Sacramento, CA makes its debut on the top 10 of Realtor.com’s Top Turnaround Report for the first time ever in Q3 2012. Ranking #2, the inventory count in California’s capital was down -45.94% year-over-year and median list prices were up 12.06% from Q3 2011 at $224,000. Though the unemployment rate of 10.3% in August 2012 was higher than the national average, it was down from last year’s rate of 11.9%. The number of default notices of foreclosure in Sacramento also dropped by -36% in the third quarter of 2012 year-over-year.
3. San Jose, CA ranked #3, is up from #5 in Q2 2012 based on a number of factors. With a median list price of $575,000 in Q3 2012, up 15.26% and a -41.61% decrease in inventory year-over-year, the San Jose market is making positive strides. The August 2012 unemployment rate of 8.5% was down from 9.9% in August 2011 and has the most optimistic forecast for jobs this fall according to Forbes.
4. San Francisco, CA moved up to position four, from #8 last quarter. This quarter-over-quarter jump can be attributed to its 39.63% reduction in inventory and its 35.71% decrease in median age of inventory. Another factor contributing to this foggy city’s turnaround is its low foreclosure rate of 1 in every 1,603 housing units, far below the national average of 1 in every 730 housing units.
5. Seattle-Bellevue-Everett, WA is showing significant improvements in all three of its key housing indicators. Home prices are continuing to increase, rising almost 13% in the third quarter over last year. Seattle has also seen a large reduction in both its median age of inventory (-45.57%) and inventory (-40.62%). Seattle’s September foreclosure rate of 1 in every 1,149 housing units is also well below the national rate.
6. Bakersfield, CA is moving up on the Realtor.com Turnaround Town List. Total inventory is down -41.77% compared to this time last year, and homes are moving 41.54% faster. New home construction is surging, with building permits increasing almost 70% through August 2012 when compared to the full year of 2011. However, unemployment is still high at 12.8% in August and 1 in every 211 housing units received a foreclosure filing in Kern County in September 2012.
7. Santa Barbara-Santa Maria-Lompoc, CA rose three spots this quarter thanks in part to a 25.05% increase in median listing price, the second highest in the nation. The county of Santa Barbara also had a foreclosure rate of 1 in every 440 homes in September, putting it well below the national. The job market continues to rebound with a 1.0% drop in unemployment from August 2011 to August 2012.
8. Phoenix-Mesa, AZ fell from the #1 ranking last quarter, but remains in the top 10 in Q3 2012. The MSA ranked first in median listing price for the second quarter in a row, with an increase of 28.59%. Its national ranking dropped in the categories of median age of inventory and inventory, but it is still showing significant decreases in these indicators, at -33.33% and -29.75% respectively. The Phoenix area has been a favorite of investors thanks to its low housing costs.
9. Fresno, CA maintains its position this quarter with a quick-paced housing market moving more than 37.70% faster than the third quarter last year. Available inventory has also decreased more than -44.27%. Limited inventory is creating demand in the Clovis area, with several new home developments planned. The metro continues to struggle with high foreclosure rates—filings were 1 in every 421 units in Fresno County in September 2012—and unemployment reached 14.0% in August.
10. Miami, FL stays in the top ten on Realtor.com’s Turnaround Town List this quarter, down from #3 in Q2. Median list prices increased 14.57% over the third quarter of 2011, and homes moved 34.00% faster. Inventory is down -22.37%, with investors increasingly attracted to the area. As home prices appreciate, more investors are “flipping” in Miami—the number of flips increased 25% in the first half of 2012 compared to 2011, and the average gross profit was $38,943. Foreclosures are still high, with filings of 1 in every 229 units in Miami-Dade County in September 2012.
Where Are Florida Markets Now?
Nothing illustrates the recovery’s Westward moment so dramatically as the fate of the top three Top Turnaround Towns one year ago: Miami (#1 in 2011 Q3), Orlando (#2 in 2011 Q3) and Fort Myers-Cape Coral (#3 in 2011 Q3). All three are continuing to stabilize, inventories are down and prices are still rising at a healthy pace. However California markets that were still flooded with foreclosures a year ago have overtaken them on the Top Turnaround list.
- Miami, FL held the top spot on the Top Turnaround list from its inception and until first quarter of 2012. It has remained in the top ten through Q3 2012…but just barely. Today, Miami still ranks sixth nationally in year-over-year list price growth and the age of its inventory ranks ninth, but the decline in the size of its inventory has slipped to 44th. This slowdown of inventory decreases shows that Miami inventory levels have begun to stabilize.
- Orlando, FL is a popular venue for foreign investors. Orlando’s housing market began a rapid turnaround last year securing it the second position on the Q3 2011 report. Today, Orlando has fallen to #24 nationwide as the decline in its inventory has slipped to 53rd and its search to listing ratio now ranks 64th – a sign that fewer buyers are looking for bargains as its market stabilizes.
- Fort Myers-Cape Coral, FL was once a national foreclosure hotbed. It saw steady improvement last year – ranking it third best in the nation. Now, the market ranks 61st on the list of 146 markets in the report. The primary reasons for this decrease in recovery are that listings are taking longer to sell and its search to listing ratio has fallen to 138th in the nation.
Not only do California markets dominate the Top Ten Turnaround Towns, they also make up this quarter’s “zoom towns”, markets that are moving up rapidly in the Turnaround Town index.
- Orange County, CA. The market soared 62 spots in just one quarter to become 25th hottest market in the nation. A year ago, Orange County ranked 136th, only 11 slots from the bottom. Orange County’s secret is a shrinking inventory declining faster than all but 14 markets in the nation.
- Stockton-Lodi, CA. Plagued by economic issues and more than its share of foreclosures, Stockton-Lodi today is a market on the rise. In the past quarter, it has moved from #61 to #16 on the Realtor.com Turnaround Town list. Shrinking inventory (ranked #2 in the nation) and less time in inventory (#4 overall) are the keys to Stockton-Lodi’s amazing progress this quarter.
Methodology: Rankings of markets are based on their positive year-over-year median price appreciation, reduction in year-over-year median time in inventory, inventory reductions and low unemployment rates on a year-over-year basis. The Realtor.com Turnaround Towns Report uses a formula based on price appreciation, changes in inventory, time in inventory, unemployment rate, and searches by Realtor.com users — a leading indicator of demand — and the ratio of search to listings to equalize markets by size. The resulting report not only reflects price changes that have taken place, but also gives weight to supply and demand dynamics that will create continued progress in future months.