A shortage of housing inventory is driving up home prices in select metropolitan markets, according to Pro Teck Valuation Services' May ‘Home Value Forecast Update.’
According to the firm, the sold-to-list price ratio, one of the primary indicators used to measure the health of the housing market, typically fluctuates between 92% and 98% but can exceed 100% in very hot markets.
‘While many were predicting that REO and the 'shadow inventory' would keep real estate markets depressed, in reality, the shortage of housing inventory has led buyers to bid more competitively against one another, leading to significant home price increases and tighter housing conditions,’ says Tom O'Grady, CEO of Pro Teck.
The forecast for May includes a list of the 10 best- and 10 worst-performing metropolitan markets, as ranked by Pro Teck's market condition ranking model. The rankings are run for the single-family home markets in the top 200 Core-Based Statistical Areas on a monthly basis. According to the firm, a number of market indicators are used to arrive at the rankings, including sales/listing activity and prices; months of remaining inventory; days on market; sold-to-list price ratio; and foreclosure and REO activity.
This month, the Las Vegas-Paradise and Reno-Sparks, Nev., markets – both of which had been very distressed since their respective market peaks in 2005 and 2006 – are highlighted as ‘hot’ markets. California continues to be well-represented on the list, with Los Angeles, Oakland and Sacramento also coming in as top markets.