WALTHAM, Mass., Feb. 25, 2016 /PRNewswire/ -- This month Pro Teck Valuation Services' Home Value Forecast revisits the communities of Phoenix and Cleveland—two cities with two very different recoveries, due in part to a difference in foreclosure laws.
"In our May 2014 Update we highlighted the differences in the recoveries the two cities were experiencing, and how foreclosure laws in Cleveland (judicial foreclosure) versus Phoenix (quicker, non-judicial foreclosure) were impacting the market," said Tom O'Grady, CEO of Pro Teck Valuation Services. "Today, the lag in recovery can still be seen in states with judicial foreclosure laws, where the foreclosure process can take up to two years."
While only 22 states use judicial foreclosure, Pro Teck found that 7 of 10 CBSAs with the largest percentage of foreclosures this month, and 19 of the largest 25, are from judicial states. Cleveland is number 21 on the list; Phoenix on the other hand is number 174.
Here's a closer look at how the two communities are doing today.
In May 2014, Cleveland was one of Pro Teck's "Bottom 10" markets, mostly due to there being one foreclosure sales for every three "market" sales (32.47%). In a healthy market, foreclosure sales as a percentage of market sales would be around 5% (One foreclosure sale for every 20 market sales).
Today, Cleveland's foreclosure sales as a percent of market sales is 17.45% — still high, but half of what it was a year and eight months ago. Months of Remaining Inventory (MRI) has also seen a reduction, from 8.39, to a healthier 6.26.
"Cleveland's judicial foreclosure process has drawn out its recovery versus Phoenix, and prices have not rebounded to anywhere near pre-crash levels," said O'Grady. "With a large number of 2006 HELOCs coming due, many could find themselves in a difficult situation when their loan is called."
In 2012, after overshooting on the downside, Phoenix's housing prices rebounded strongly. During this time, Phoenix quickly worked through its foreclosure inventory, inspiring confidence in the housing market's trajectory. In May 2014, Pro Teck commented on how Phoenix was returning to market fundamentals, with a balanced market and foreclosures trending back towards historic norms.
Today, Phoenix has recovered completely and has a strong and stable real estate market with 5% foreclose as a percent of sale and 4.51 MRI, both signs of a strong market.
"This strength can be seen in pricing trends, where once the average home had lost more than 50% of its value are now back to 85% of pre-crash highs," said O'Grady. "We believe that Phoenix will make up the majority of the 15% gap within the next two years."
CBSA Winners and Losers
Each month, Home Value Forecast uses a number of leading real estate market-based indicators to rank the single-family home markets in the top 200 CBSAs and highlight the strongest and weakest metros.
Top 10 CBSAs this month include:
- Bellingham, WA
- Bend-Redmond, WA
- Grand Rapids-Wyoming, MI
- Medford, OR
- Ogden-Clearfield, UT
- Portland-Vancouver-Hillsboro, OR-WA
- Sacramento-Roseville-Arden-Arcade, CA
- Salt Lake City, UT
- Santa Rosa, CA
- Stockton-Lodi, CA
"The top ten CBSAs have stayed consistent over the past few months, with Grand Rapids-Wyoming, MI being a newcomer and only East Coast entrant," said O'Grady. "Forbes Magazine recently rated Grand Rapids as one of the top cities to invest in housing in 2016 – we can see why."
Grand Rapids sold price per square foot of living area has rebounded to pre-crash highs, and look poised to continue to rise. Employment gains have kept track with price appreciation, something that bodes well for the future.
Bottom 10 CBSAs this month include:
- Abilene, TX
- Detroit-Dearborn-Livonia, MI
- El Paso, TX
- Killeen-Temple, TX
- Longview, TX
- McAllen-Edinburg-Mission, TX
- Miami-Miami Beach-Kendall, FL
- Atlantic City-Hammonton, NJ
- Jacksonville, NC
- Midland, TX
"The ten Texas communities that we wrote about last month remain in our bottom ten this month," said O'Grady. "Midland, TX has seen a 30% decrease in sales and a 103% increase in houses on the market, a phenomenon that will put downward pressure on prices."
About Home Value Forecast
Home Value Forecast (HVF) is brought to you by Pro Teck Valuation Services. HVF provides insight into the current and future state of the U.S. housing market, and delivers 14 market snapshot graphs from the top 30 CBSAs.
HVF is built using numerous housing and economic data sources. The top 750 CBSAs as well as data down to the ZIP code level for approximately 18,000 ZIPs are available with a corporate subscription to the service. To learn more about Home Value Forecast and Pro Teck's full suite of residential real estate valuation products, visit www.proteckservices.com. You can also find Pro Teck on Twitter at @ProTeckServices.
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SOURCE Pro Teck Valuation Services