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Jobs and Quality of Life Drive Housing Price Gains Again as Once-Hot Distressed Markets Cool

Denver and Portland Now Back at Peak Levels

Molly Boesel    |    Property Valuation

Last year, at this time, the markets with the biggest gains in the S&P/Case-Shiller home price indices were those that had fallen the hardest in the past. This fall, however, the leading housing markets appear to be those appreciating for more customary reasons, such as quality of life and the opportunity for high-paying jobs.

Overall, home price increases appear to be accelerating modestly year over year: the national home price index was up 4.9 percent in September, compared to 4.6 percent the month before that. The 10-city composite was up five percent, while in August it was 4.7 percent. The 20-city composite had a similar result, climbing 5.5 percent in September. The monthly increases were more modest: up 20 basis points in the national index, as well as each of the 10 and 20 city composites.

Average prices in the markets in the 20-city index have now recovered to winter 2007 levels. Meanwhile, the two composites have grown about 35 percent since their lows in March 2012 and are currently between 11 and 13 percent below their peaks.

Home price growth is definitely shifting westward, with San Francisco, Denver and Portland showing the biggest increases in the S&P/Case-Shiller indices for September. San Francisco and Denver came in tied for first, at an 11 percent year over year appreciation, while Portland’s HPI jumped 10 percent. Both Denver and Portland have now made up all of the ground they lost during the crash and are again at their all time price peaks, and San Francisco is right behind them at just one percent below peak.

Meanwhile last year’s hot markets—like Las Vegas and Miami—appear to be cooling as they posted single-digit growth, another possible indication of more normal markets. Miami and Las Vegas are still well below their peaks (down 27 percent and 38 percent respectively).

Although all the major markets showed price increases in the September, the smallest gains came from northern cities such as Chicago, Washington, DC and New York City up one percent, two percent and three percent, respectively.

Nationally, the increases in the local markets have pushed the numbers for the entire country to about five percent below peak. But it may take another couple of years to match the former peak.

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