Methodology
The sources for these statistics in the Inman News analysis of 10 markets are: the U.S. Bureau of Labor Statistics, Moody’s Analytics, U.S. Census Bureau, National Association of Realtors, National Association of Home Builders, RealtyTrac and Altos Research. Other companies provided additional data and charts that are published as a part of the overall report but were not considered in the top 10 rankings.
Where available, median sales price appreciation, unemployment rate, affordability and foreclosure activity rate were given the most weight in determining which markets made it to the list.
All markets on the list exceeded the national average in at least some statistical areas that were considered in the rankings, if not all.
That requirement eliminated the vast majority of markets considered. No metropolitan area without an available figure for median sales price appreciation, as listed by the National Association of Realtors, was included on the list. Also, no market with a median sales price that declined more than once on a quarterly basis from the first quarter of 2010 through the last quarter of 2010 was included.
For the remaining markets, other factors (where available) were also considered and compared to national figures: job growth projections, median household income growth, population growth, in-migration growth, building permit growth, occupied-housing-unit growth, average days on market, and foreclosure activity growth.
Markets were compared to each other in terms of overall jobs market (taking into account unemployment rate, job growth projections, median household income growth), overall population health (population growth, in-migration growth, occupied-housing-unit growth), overall foreclosure activity (foreclosure rate and growth), potential for new construction (building permit growth), and turnover rate (average days on market).
There were no firm population limits for the markets chosen — however, the markets were all large enough that the bulk of these criteria were available for comparison.
In ranking these markets from No. 1 to No. 10, the factors given the most weight were population, sales volume and median sales price appreciation. Population was weighted most heavily, followed by sales volume in proportion to population, and rate of price appreciation. Walkability scores were not a factor in ranking.
Methodology for at-a-glance data summary boxes: Population data is from the U.S. Census Bureau. Median sales price data comes from the National Association of Realtors. Unemployment rates are from the Bureau of Labor Statistics. Foreclosure activity rates come from RealtyTrac, walkability scores come from Walk Score; and sales volume figures for the Buffalo and Des Moines metro areas come from CoreLogic while the rest come from local Realtor associations and MLSs: Bismarck Mandan Board of Realtors, Fargo-Moorhead Board of Realtors MLS, Elmira-Corning Regional Board of Realtors MLS, Tri-City Association of Realtors, Northern New England Real Estate Network, Inc. (NNEREN), Bloomington-Normal Association of Realtors, Metropolitan Regional Information Systems, Inc. (MRIS) and Maine Real Estate Information System, Inc. (MREIS).
Walk Score figures are an average for the largest cities in these metro areas. A score below 50 indicates a car-dependent city. A score between 50-69 indicates a somewhat walkable city.
The Bismarck metro area is composed of Burleigh and Morton counties, but only the Morton County foreclosure rate was available.
Methodology for additional charts
Editor’s note: The information below is supplied by the listed companies to describe their respective methodologies in compiling data to describe real estate markets that are on the rise.
Altos Research
CoreLogic
HotPads
Onboard Informatics
Realtor.com
RealtyTrac
Trulia
Zillow
Altos Research: Analysis was based mostly on Altos Research real-time market analytics. The company did not apply any sort of format forecasting model to these markets. While Altos Research considered unemployment and other structural factors, the company did not incorporate hard numbers into this analysis. Key indicators from its analytics platform that weighed the most in this analysis include year-over-year inventory, the current state of price reductions (how many active sellers are feeling the need to reduce their prices), and the year-over-year prices of new listings entering the market in recent weeks. "Days on market" was a factor; however, this value can be misleading in some cases, as buyers and sellers in each market have different expectations as to what is considered "high" or "low" days on market. What seems like a long time on market in one market may be normal.
The markets provided are not provided in any particular order, but are 10 markets that based on current market conditions are poised to do well in 2011. Of course, real estate is local. While this analysis was completed on a metro-level, there are going to be varying results for local communities and ZIP codes based on property type within each metro.
Altos Research would consider these markets as poised to outperform most other markets across the U.S.
The company’s analysis focused on 200 metropolitan statistical areas (MSAs) where it monitors the market weekly. There may be other markets areas outside of this list that may do better.
Finally, this information is not to be construed as investment advice. Altos Research is not an investment adviser nor is the company licensed to act as such.
Markets List:
Diving into our data and analytics as of this week, the results came back quite interesting. Several markets would be considered "specialty" or "luxury" markets. This is consistent with what we’re seeing on a larger, macroeconomic scale. Companies like Tiffany’s & Co and Williams Sonoma had big fourth-quarter results.
Consumer confidence was higher, and unemployment among college-educated people is much lower than the national average. The stock market in general is doing well, so those people in this segment of the market are also doing better than in years past.
Additionally, recent years saw the sale of second properties just after the crash. And while there may be less volume, those that are buying homes in these markets might find less selection and therefore are willing, and able, to pay a bit more if the demand is true.
Maui: A small market but one showing early price strength in 2011.
Honolulu: Prices fell off a bit last year after holding steady for a couple of years. Inventory has crept up, but new listing prices are improving in January as compared to fourth-quarter 2010.
Aspen, Colo.: Year-over-year inventory is lower and new list prices are moving higher.
Charleston, S.C.: Inventory is higher than peaks in ’08, ’09 and ’10, but the price of homes coming into the market is moving higher in recent months.
Pittsburgh: This has consistently performed over recent years. Never a bubble market and never a crash market.
Ann Arbor, Mich.: College towns are typically good places to be. Showing stability right now.
Louisville, Ky.: Inventory is down and asking prices have been pretty stable over the last couple of years.
New Orleans: Inventory is way down in the short term. As we’ve seen in other markets in recent years, supply constraints provides pricing stability.
San Jose, Calif.: Silicon Valley is full-steam ahead, with such notable employers in the region as Google, Facebook, Twitter, Zynga and Groupon. Companies are hiring engineer and marketing talent, which makes for good fundamentals in the housing market. While San Jose has its share of subprime, there are plenty of areas with stable markets, like Palo Alto, Los Altos and Mountain View.
Manhattan (condo market): Wall Street had a good year …
CoreLogic: The share of mortgages delinquent by 90 days or more includes loans that are in foreclosure or for properties that became real estate owned (REOs). We have approximately 85 percent loan coverage. The delinquency data covers both prime and subprime loans for all first-lien performance. The delinquency rate chart is sorted to show the markets with the lowest share of mortgage loans in delinquency for 90 or more days in November 2010. Each market on the list has a volume of at least 100,000 loans.
HotPads: The list represents the top 10 cities experiencing the fastest home sales turnover during Jan. 1-25, 2011. To compile the list, metro areas with a population of at least 100,000 and at least 500 listings on HotPads were considered. The ranking takes into account number of days listings were active on HotPads and number of listings in that time period. Turnover rate includes any reason a listing was taken down, including being sold, canceled, etc. The list is sorted by shortest median number of days listings from each city were available on HotPads. On HotPads, the median time on market for homes for sale is 108 days.
Onboard Informatics: In the charts provided, Onboard focused on three metrics:
1. Highest volume per population;
2. Fastest-rising prices (fourth-quarter 2010 vs. third-quarter 2010), using the percent change in price ("PCT_CHANGE_PRICE") metric;
3. Fastest rising volume (fourth-quarter 2010 vs. third-quarter 2010), using the percent change in volume ("PCT_CHANGE_VOLUME") metric.
In each chart provided, all three metrics are charted. However, each chart uses a different metric to base its top 10 cities on. The percent-change metrics use the left-hand axis, and the volume per population values use the right-hand axis. There is one chart per metric, which show the top 10 cities in each category.
The No. 1 market is on the left; the No. 10 market is on the right. The percent-change values are bars and the volume per population is a line.
The data comes from public record, including information from county assessors’ offices. Onboard then used its internal aggregation methods on that data to help generate results.
There are separate sets of charts to represent those markets with at least 50,000 population and those markets with at least 10,000 population.
Realtor.com (operated by Move Inc.):
Days on Move Inc. Network: the average number of days between the date properties were listed on the Move Network and the end of the date the listing went off-market.
Median Active Listing Price – The listing price for half the listings active at any time during the measured time is higher than this value
Active Listings Count: The number of properties that were active any time during the measured time period and which remained on the market past the first day of the measure time period.
Compound Annual Growth Rate (CAGR): We have adopted the familiar CAGR idea slightly — generalizing the usual usage for annual growth. Here it is used to smooth out seasonal fluctuations and allows the creation of a single summary rate across the time period for which we have data but at the conventional time delta.
Realtor.com, operated by Move Inc., is supplied with data from 933-plus multiple listing services throughout the U.S. Seventy-five percent of all listings displayed on the Move Network are updated every 15 minutes, with the remainder updated every one hour to 24 hours.
RealtyTrac: Starting with a universe of the nation’s 100 largest metropolitan statistical areas based on population, the RealtyTrac top 10 list was calculated by filtering out the top 25 metro areas in each of the 10 categories listed below and then tabulating which metro areas showed up most frequently in those top-25 lists.
If multiple metro areas showed up the same number of times in the top-25 lists, the first tiebreaker was which showed up the most in the top-10 lists for those same categories, and the second tiebreaker was which had the highest two-year change in average home sales price.
The company tracks all indicators listed here except for unemployment data. RealtyTrac took the metro unemployment numbers directly from the Bureau of Labor Statistics website.
Data that factored into the rankings:
1. Lowest 2010 foreclosure activity rates;
2. Biggest 2009-10 decreases in foreclosure activity;
3. Biggest 2008-10 decreases in REO inventory;
4. Lowest unemployment rates in November 2010;
5. Biggest year-over-year decreases in unemployment rates for November 2010;
6. Biggest 2009-10 decreases in percentage of total sales that were foreclosures;
7. Biggest 2009-10 increases in foreclosure sales average prices;
8. Biggest average discounts on foreclosure sales in 2010;
9. Lowest average sales prices in 2010 (for all sales, including foreclosure and nonforeclosure);
10. Biggest 2009-10 increases in average sales prices (for all sales).
Trulia: The company calculates an index that suggests the best places to buy vs. rent a home. The company calculates its price-to-rent ratio "using the average list price compared with average rent on two-bedroom apartments, condos and townhomes listed on Trulia.com (the data presented is based on listings as of Jan. 10, 2011). To create the list, Trulia (analyzes) the largest 50 cities in America, by population." In calculating total costs of homeownership, Trulia considers "mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase, and ongoing (homeowners association) dues and private mortgage insurance, where applicable. Total costs of homeownership include an offset for the tax advantages of homeownership, including mortgage interest, property tax and closing-cost deductions."
Zillow: To determine this list, Zillow looked at current vs. historical price-to-income ratio and a blend of home-value changes on a month-over-month, quarter-over-quarter and year-over-year basis. Markets identified here are at or below their 15-year historical averages (1985 to 2000) for price-to-income ratios compared to 2010. The second element, with equal weight, was momentum of home values in an area. Zillow looked for a reduction in the amount that the market was declining or saw the most appreciation in those areas. Most were still showing negative month-over-month trends, but these markets are showing the least amount of month-over-month depreciation in home values. Zillow did not limit the metro areas on this list by population, but did exclude areas with unemployment higher than 13 percent. Home values and prices are based on the Zillow Home Value Index. Income figures come from the Bureau of Labor Statistics.
