As a part of their 2014 U.S. Residential & Foreclosure Sales Report, RealtyTrac acknowledged that, in the past year, appreciation rates began to ease in 63% of all major housing markets. In particular, 18 of the 20 largest housing markets experienced similar slowdowns in home value gains. Perhaps even more importantly, residential properties (single-family homes, townhomes and condos) sold at an estimated annual pace of 4,508,559 in August, down one-half percent from the previous month and down 16 percent from a year ago — the fourth consecutive month where annualized sales volume has decreased on a year-over-year basis.
The RealtyTrac report also concluded that the median price of U.S. residential properties increased 3% over the course of a month. Both distressed and non-distressed sales in August averaged $195,000. The recent increase witnessed average home prices jump 15% from the same time a year ago. As they currently stand, the national average price of a home is at its highest level since 2008, a six-year high.
“Higher-end properties are taking up a bigger share of a smaller home sales pie, boosting the median home price nationwide higher even as home price appreciation slows to single digits in many of last year’s red-hot local housing markets,” said Daren Blomquist, vice president at RealtyTrac. “On the other hand, markets where large institutional investors and other buyers have not picked clean lower-priced inventory are continuing to see strong, double-digit increases in median home prices.”
The rate in which prices continue to appreciate is impacting the sales of higher-end homes. The sales of homes worth more than $200,000 increased 10% over the course of last year. Conversely, homes valued at less than $200,000 sold at a slower rate, 9% down from a year ago. Perhaps even more impressively, homes valued between $500,000 and $1 million were the beneficiaries of an increase in sales. Homes in this range witnessed an 18% increase in sales over the last year. Seattle, in particular, appears to have benefited from the slower appreciation rates.
“Housing sales in Seattle continue to be very healthy across the board, but one area in particular that has shown strong growth this year is the luxury market,” said OB Jacobi, president of Windermere Real Estate, covering the Seattle market. “In August, homes priced above $2 million saw a 38 percent increase in sales compared to a year ago. I attribute this to Seattle’s economic boom, which is attracting an increasing number of high-paying, executive-level professionals as well as international interest from buyers who are competing for multi-million dollar homes.”
Increased sales of higher end homes appear to be the result of decreased appreciation rates. According to the recent RealtyTrac report, 124 (63%) metros with a population of more than 200,000 saw the rate of appreciation temper. However, of the largest metros involved in the survey, 36 of the top 50 markets (72%) saw the rate of appreciation decline. The following housing markets are the most noteworthy to have experienced a decline in appreciation:
- San Francisco (9 percent annual appreciation in August compared to 37 percent a year ago)
- Los Angeles (7 percent annual appreciation in August compared to 27 percent a year ago)
- Phoenix (6 percent annual appreciation in August compared to 25 percent a year ago)
- Atlanta (10 percent annual appreciation in August compared to 28 percent a year ago)
- Las Vegas (8 percent annual appreciation in August compared to 26 percent a year ago)
“We continue to see the traditional housing cycle this year with most of the price appreciation happening in the spring and early summer months,” said Chris Pollinger, senior vice president of sales at First Team Real Estate, covering the Southern California market. “Inventory in the Southern California coastal markets has become far more balanced, giving buyers a good level of choice and a moderate amount of negotiating room.”
While price appreciation has slowed in 18 of the nation’s top 20 housing markets, there are still regions in which appreciation rates continue to rise. The following markets have seen an increase in appreciation rates over the course of the last year:
- Cincinnati (22 percent annual appreciation in August compared to 4 percent depreciation a year ago)
- Cleveland (23 percent annual appreciation in August compared to 1 percent a year ago)
- Miami (20 percent annual appreciation in August compared to 15 percent a year ago)
- Pittsburgh (7 percent annual appreciation in August compared to 3 percent a year ago)
- Seattle (8 percent annual appreciation in August compared to 7 percent a year ago)
Of the 197 major markets included in the RealtyTrac report, 22 saw their average home price reach a peak in August.
“The Ohio markets continue to experience an increase in overall pricing, but a noticeable decline in total units sold,” said Michael Mahon, executive vice president/broker at HER Realtors, covering the Cincinnati, Columbus and Dayton, Ohio markets. “The declining year-over-year sales unit numbers can be attributed to the lack of available inventory, particularly within the first-time home buyer price range. As cash sales continue to decline within the Ohio markets, the available inventory is continuing to experience improvement, which shows further stability and growth of the Ohio housing stock.”