Nationally, asking home prices are finally starting to balance out to a more sustainable pace, even in markets that saw the biggest gains following the recession, according to the latest Trulia Trends report.
Asking home prices rose at their slowest rate in 13 months, rising just 8% year-over-year in May. While this growth is slower than in previous months, Trulia notes the 8% hike is still far above the long-term historical norm for home price appreciation.
Price gains also continue to be widespread, with 93 of the 100 largest metros recorded by Trulia reporting quarter-over-quarter price increases.
The real change, Trulia notes, has been the price slowdown in the “hyper-rebounding” markets of the West—none of which saw price gains of more than 20% in May 2014 when compared on a year-over-year basis.
Additionally, May was the first time since July 2012 where none of the 100 largest metros experienced a 20% gain in home prices.
“Today, with no markets seeing price gains of more than 20% and only four markets seeing price declines, home price changes are looking more balanced, sustainable, and widespread than at any point since the price recovery began,” writes Trulia Chief Economist Jed Kolko.
Of the western markets, California’s Riverside-San Bernardino saw the highest increase of 18.8% year-over-year in May.
Markets that had significant slowdowns, when compared to their growth in 2013, were Las Vegas, Sacramento and Oakland, which had gains from around 30% in May 2013 to around 15% in May 2014.
Overall, Trulia notes half of the top-10 markets with the largest price gains are outside the West, signaling another “big change” from last year when a majority of the biggest price increases were in the region.
Fewer “extreme markets” with either price increases of 20% or with price declines are bode well for the housing market, Trulia suggests.
“Extreme price increases create unrealistic expectations, encourage flipping, and might discourage some owners from selling if they expect big increases to continue,” writes Kolko. “At the same time, price declines push people into negative equity, raising the risk of default and foreclosure.”
Read more at Trulia.
Written by Jason Oliva