As home prices reach new highs in hot markets such as California, investors are zeroing in on smaller metro areas such as Toledo, Ohio – the city with the greatest home price appreciation in the nation.
The median sales price of single-family homes and condos was $193,000 in October, up 2 percent from September and 16 percent from a year ago, according to RealtyTrac data. This is the highest level since September 2008.
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The housing recovery has been largely by investors for the most part. As lower-priced inventory (the most appealing to investors) dries up in a given market, investors move on to other often smaller markets, where more ideal inventory is available.
“This has created a ripple-effect recovery moving out from traditional investor hot spots such as Phoenix, Atlanta and many California markets and into markets such as Charlotte, Columbus (Ohio), Dallas and Oklahoma City,” said Daren Blomquist, vice president at RealtyTrac, in the report.
The following markets have the biggest annual increase in median sales prices among metro areas with a population of 500,000 or more:
- Toledo, Ohio, up 33 percent
- Memphis, Tenn., up 18 percent
- Austin, Texas, up 17 percent
- Miami, up 16 percent
- Houston, up 16 percent
- Cincinnati, up 15 percent
- Chicago, up 15 percent
For some of these markets, this is a strong reversal from previous years. Cincinnati is experiencing a 15 percent annual home price appreciation this year, while it had a 4 percent annual depreciation last year. Tulsa, Oklahoma, has an 11 percent home price appreciation this year, up from a 5 percent annual depreciation last year. Charlotte is up 10 percent this year from just a 1 percent annual depreciation last year.
Meanwhile, markets where home price appreciation is slowing this year include Los Angeles, San Diego, Phoenix, Boston, and to a lesser extent New York, Philadelphia, Atlanta and San Francisco.
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A slowdown in home price acceleration in some of these markets could, in theory, be good news for buyers, especially those looking to purchase their first home. However, both slower price increases and greater inventory is mostly seen at the high end of the market.
In Dallas, Atlanta, Phoenix and Nashville, there were at least two times as many homes for sale priced in the top third of the market than in the bottom third, according to a Zillow report last week.
“In a majority of markets, the share of homes in the upper price range was growing faster than the share in the lower price range,” Zillow noted in the report. “Buyers with a budget on the low end for their metro are likely to find tight inventory.”
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