Summary

National Trends- With the spring home buying seasons just weeks away, inventories are at historic lows, list prices have strengthened over the past 12 months, and demand is healthier.  The stage is set for a broad-based move towards recovery should these conditions continue in 2012 as the three critical metrics tracked by Realtor.com are substantially improved in February 2012 compared to February 2011. The total US for-sale inventory was down by -22.02% in February 2012 compared to a year ago, and declined in one month in all but two of the 146 markets covered by Realtor.com. The median age of the inventory fell -9.76% on a year-over-year basis last month and the median national list price was up by 6.82% last month compared to February 2011.   The nation’s housing markets as a whole are in better shape today than at any time since the 2009-2010 tax credits.

Year-over-Year % Change	Feb 2012 vs Feb 2011	Feb 2011 vs Feb 2012
Number of Listings	-22.02%	-4.96%
Median Age of Inventory	-9.76%	+11.82%
Median List Price	+6.82%	-6.88%

Local Market Variations – The dynamics of recovery and market reversal are remaking the geography of conditions across the nation today.  Many markets in areas hardest hit by foreclosures and low prices at the beginning of the housing decline — such as Florida markets and Phoenix — continue to register large year-over-year declines in inventories and large year-over-year increases in median list prices.  At the same time, median list prices in other markets once the epicenter of the housing boom — including Las Vegas and many parts of California – continue to lag behind the country as a whole.  Finally, markets that never experienced the dramatic run-up in housing values that preceded the housing crisis nor the subsequent decline, now suffer price declines. For example Chicago, Knoxville, Detroit and Milwaukee registered some of the largest declines in their median list prices in February 2012 on a year-over-year basis as the impact of a weak economy continues to take its toll across the nation.

Changing foreclosure inventories—declines resulting from the processing slowdown and increases due to economic factors along with increases in negative equity together are having their impact on both prices and inventories.  However, inventories will certainly increase in the coming months, especially in judicial states like Florida, as lenders process and list the huge backlog of distressed properties freed by the recent multi-state Attorneys General agreement. The shadow foreclosure inventory is considerably higher than the total inventory on the market today.  Unless properly managed, the disposition of such properties could easily undermine the progress that has been made to date.

National Perspective

Median List Prices -The nationwide median list price for single family homes, condos, townhomes and co-ops (SFH/CTHCOPS) in February 2012 was $188,000, up from $185,500 in January and 6.82% higher compared to a year ago (see chart at top.)  At the same time last year—roughly the beginning of the 2011 home buying season–the median national list price stood at $176,000, 6.88% below the median list price in February 2010.  While higher list prices do not always translate into higher sales prices, they may signal a growing optimism on the part of sellers that the market has begun to turn around.

For Sale Inventories – The national for-sale inventory of SFH/CTHCOPS was relatively stable in February (+0.54%), reversing eight consecutive months of decline but consistent with the onset of the spring home buying season. More telling is that the total number of SFH/CTHCOPS listings on Realtor.com was -22.02% below levels observed in February 2011.  This favorable trend represents a considerable improvement over conditions observed at the beginning of the 2011 home buying season, when for-sale inventories were down -4.96% compared to the previous year (February 2010.)

Median Age of Inventory — The median age of the inventory of for sale listings was 111 days in February, down from 119 days in January and -9.76% below the median age observed in February 2011.  While the monthly reduction in the age of the inventory is partly seasonal, the year-over-year decline in the median age of the total for-sale inventory is again consistent with a significantly stronger market going into the 2012 home buying season.  Last year at this time, the median age of the inventory was up by 11.82% on an annual basis.

Local Market Variations

For Sale Inventories (y/y) – For sale inventories of SFH/CTHCOPS in February 2012 declined in all but two of the 146 MSAs monitored by Realtor.com compared to a year ago, with the for-sale inventory in more than half of all markets (79) dropping by 20% or more.  In February 2011, market conditions were not as favorable.  While inventories began declining in many markets, the declines were smaller and not nearly as widespread—one year ago.  Only 96 markets had experienced a year-over-year decline in their for-sale inventories and only 5 markets had dropped by 20 % or more.

Areas experiencing the greatest year-over-year reductions in their for-sale inventory in February 2012 also looked very different than they did a year ago.  In February 2012, the 10 MSAs with the greatest declines were concentrated in Florida, Arizona, and California, areas hardest hit by the housing crisis. In February 2010, the 10 MSAs with the largest % declines in their for-sale inventories were primarily small Midwestern areas.

For-Sale Inventory

10 MSAs with the Greatest Year-over-Year Reductions

At the other end of the continuum this year, only two markets in February 2012 experienced a year-over-year increase in their for-sale inventory.  These and the other eight other areas that showed the least signs of improvement tended to be concentrated in the North East corridor.  In contrast, in February 2011, 49 MSAs had experienced a year-over-year increase in their for-sale inventory and 10 markets had an increase of more than 10 %.  As shown below, these areas were primarily in California and Nevada, suggesting the most troubled housing markets are gradually moving away from the sand states and into more industrialized areas in the Midwest and North East.

For-Sale Inventory

10 MSAs with the Greatest Year-over-Year Increases

Median List Prices (y/y) – In February 2012, the median list price was up by 1% or more on an annual basis in the majority (106 MSAs) of the 146 MSAs monitored by Realtor.com, and up year-over-year by 5% or more in 62 MSAs.  The median list price was down by 1% or more in 16 markets on a year-over-year basis, with only 4 markets registering declines of 5% or more.  The remaining 24 markets haven’t experienced a significant change in median list prices compared to a year ago.

These statistics represent a steady and significant year-over-year improvement in median list prices in the majority of markets monitored by Realtor.com since the onset of the 2011 home buying season.  In February 2011, for example, list prices in the majority of housing markets were down by 5% or more.

Note: Markets are classified as stable if the change in median list price was between -.99 and +.99 %.

Median List Prices – Largest y/y Increases – Seven of the ten markets with the largest year-over-year increases in median list price in February 2012 are in Florida. Phoenix-Mesa, Washington DC, and Boise, ID also appear on the list.  The relatively large increases in the median list price in most Florida markets compared to one year ago suggest that these hard-hit areas may have reached bottom and are now into the recovery mode.  However, the relatively large shadow inventory of potential foreclosures in the state could easily undermine the nascent recovery process.

In contrast, in February 2011, the few markets registering a year-over-year increase in their median list price showed significantly lower increases (with the exception of Fort Meyers-Cape Coral FL) and were primarily located in small Midwestern MSAs.

Median List Prices

10 MSAs with the Greatest Year-over-Year Increases

Median List Prices – Largest y/y Declines – Other hard hit areas have not fared as well as Florida in 2012.  The median list price continues to be down on a year-over-year basis in Las Vegas and major California markets.  Several areas that didn’t experience a rapid run-up in housing prices (such as Chicago, Knoxville, Detroit, New Orleans and Milwaukee) now register some of the highest rates of list price declines, again suggesting a shift in both the nature and location of the nation’s housing problems.

Some of the markets with the greatest year-over-year price decline in February 2012 were also on the same list in February 2011, reinforcing the notion that these markets have yet to hit bottom.  However, Phoenix, Reno, Fort Lauderdale, and Melbourne now have year-over-year list price increases that are well above the national median.

Median List Prices

10 MSAs with the Greatest Year-over-Year List Price Decline

Median Age of Inventory – The median age of the inventory exceed 120 days in 34 markets in February, down from 46 markets in January.  While most of the markets with the oldest inventories are resort communities, particularly in Florida and the Carolinas, others are in industrialized areas that are experiencing the brunt of the economic downturn.  The list of MSAs with the longest median days on market has changed relatively little over the year.

Median Age of Inventory

MSAs with the Longest Median Days on Market

MSAs with the lowest median days on market are heavily concentrated in California.  Much the same was true in February 2010.

Median Age of Inventory

MSAs with the Shortest Median Days on Market

February 2012

Atlanta

It is impressive how much of a difference two months — and fresh, real-time data ? can affect market observations in a fast-changing real estate market like Atlanta. In fact, based on key market indicators observed on Realtor.com in the first two months of 2012, things just may be looking up for Atlanta.

Beset by economic woes and a flood of foreclosures, the Atlanta housing market surprised residents and experts when prices took a sharp decline last year. Just two months ago, the New York Times, citing November 2011 data, called Atlanta “one of the biggest laggards in the economic recovery.”[i] In the fourth quarter 2011, Atlanta topped all metros in the nation in foreclosures sales (6,458) with a foreclosure discount, a sign of instability, hitting fifth highest nationally at 48.12%.[ii]

Its precipitous year-over-year price decline reached -16% last May[iii], but in the first two months of the 2012 New Year, conditions are very positive for Atlanta.

Atlanta’s February 2012 median list price on Realtor.com rose 3.27% compared to January, the first month-over-month increase in eight months. Year-over-year prices were only 0.06% below 2011, the best showing since 2010.[iv]

With a declining December unemployment rate of 9.4%[v], down from 10.2%[vi] twelve months earlier, Atlanta is moving in the right direction. Not only is the job market improving, for sale inventories are shrinking dramatically, down 38% from a year ago and eighth best in the nation, according to the February 2012 trend data from Realtor.com.

The combination of increased demand and fewer properties suggests prices may remain positive in the near term.  A critical factor for Atlanta will be foreclosures. Nearly 4,600 of Atlanta’s foreclosures are owned by Fannie Mae and Freddie Mac, ranking it number one in the nation in terms of GSE-owned foreclosures. This rate far outnumbers those in Phoenix, Las Vegas and other major metro areas hit hard by the housing decline.[vii] Plans by the federal government to sell bulk quantities to investors to rent out foreclosures may help reduce Atlanta’s foreclosure inventory.

Atlanta isn’t out of the woods yet.  Its challenges include negative equity, a powerful driver of defaults and foreclosures. Compared to the national average of 22%, nearly 40% of all residential properties in metro Atlanta were underwater in the fourth quarter 2011, up from 34.5% in the third quarter, according to CoreLogic.[viii] Also, despite the improving economy, residential homes sales remain soft. The region saw a roughly 25% monthly drop in home sales in January 2012, according to the Atlanta Board of Realtors. The median final sale price for Atlanta home also fell to about $108,000, a nearly 10% drop from December 2011, though they were up 15% on the year.[ix]