Increase in Asking Prices Exceeds Rent in Certain Markets
By: Esther Cho 12/04/2012
National gains for rentals still grew faster than asking prices for homes in November, but in certain metros, the trend was reversed, Trulia reported Tuesday.
According to data from Trulia, rent prices in November increased by 5.6 percent year-over-year, while asking prices for homes were up 3.8 percent, representing the biggest increase so far this year.
Even though rents stayed ahead with bigger improvements, asking prices in 14 of the 25 largest rental markets managed to post greater increases compared to rents, the data provider revealed.
Denver, for example, experienced a 9 percent yearly increase for rent prices, the fourth highest out of other large metros. However, asking prices for homes in Denver rose even higher at 12.4 percent. San Francisco also posted a significant gain in rents at 5.8 percent, but asking prices rose by 9.5 percent year-over-year.
In Seattle, asking prices were slightly ahead at 8.8 percent compared to 8.3 percent for rent prices.
Rents in Houston rose the fastest year-over-year in November, posting a 16.8 percent increase. Other metros that led with significant yearly gains in rent included Oakland (11.6 percent), Miami (10.8 percent), and Philadelphia (8.9 percent).
Although recent reports have revealed typical seasonal monthly declines month-over-month for home prices, Trulia found asking prices rose monthly by 0.8 percent. According to Trulia, asking prices on for-sale homes lead sales prices by several months.
On a quarterly basis, asking prices were up 2.2 percent, with three metros posting significant quarterly gains in asking prices for the first time since the start of the housing crises, Trulia reported. The three metros were Atlanta (+6.2 percent), Riverside-San Bernardino (5.5 percent), and Sacramento (5.3 percent).
According to Trulia chief economist Jed Kolko, “price recovery is strongest in the largest metros,” while “price gains are starting to waver in smaller markets.”
Out of the 100 largest metros, 70 saw quarterly gains for asking prices, and 76 experienced yearly growth.
“The key factors behind today’s price gains are job growth, falling vacancies, and–above all–rebounding from the huge price declines of the housing bust,” Kolko explained.
Data for asking home prices and rents is based on listings found on Trulia.com.
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