The housing market shifted to recovery mode this past year, with home prices on the rise and foreclosures falling closer to pre-crisis levels, RealtyTrac claims in a new report.
Nonetheless, symptoms of distress that have weighed on the market over the past seven years continue to rear their ugly head, particularly with the high number of underwater borrowers and distressed sales, explained RealtyTrac vice president Daren Blomquist.
"This linger distress is creating an uneven pace of recovery across different local markets," he said.
More than 75 of the largest metropolitan areas across the nation posted a housing recovery index of more than 100. A score above 100 suggests the the surveyed market is recovering at a faster pace than the national average, RealtyTrac pointed out.
Markets posting the 10 highest index scores were in a wide variety of states, ranging from Hawaii to California and Massachusetts.
Rochester, NY, topped the list of markets with strong signs of recovery stemming from below-average unemployment, lower underwater and distressed sales percentages and above average drops in foreclosure activity. Not to mention, a substantive increase in home prices, RealtyTrac's index noted.
"New York is on a definite slow and steady pace, up possibly 10% in sales over the last year," said Laffey Fine Homes International CEO Emmett Laffey.
He added, "Bank-owned properties are at such a good value that they are being purchased quickly and the growing buyer pool is making the investor market robust."
Additionally, two markets in the Bay Area of Northern California ranked among the top five markets leading the recovery.
Both San Jose and San Francisco outperformed the nation for unemployment rates, decreasing foreclosure activity and median home price gains from the bottom of the market, RealtyTrac sai
Institutional investor and cash purchases were also below the national average in both Bay Area metros, which is likely because the relatively high median prices in these markets “create a barrier for institutional investors and other cash buyers – not to mention buyers using financing to purchase.”
While the index revealed that the 100 largest metro areas sampled are past the bottom in home prices, 63 markets still have at least 20% of homes underwater.
Meaning, the estimated value of the home, and loans originated during the housing bubble years still represent at least 20% of outstanding mortgages in 94 out of the 100 largest metros, the real estate information company explained.
New foreclosure activity is past its peak in all 100 largest metros, but distressed sales still account for at least one in every five sales in nearly 75% of the metros.
On the reverse side, the market recovery index in Baltimore was lowest among the 100 major metro areas ranked in the report thanks to underperforming numbers for all factors except for underwater borrowers and cash purchases, RealtyTrac pointed out.
Similarly, two metros in southeastern Pennsylvania posted index scores that were in the five lowest major metro markets.
Both Allentown and Philadelphia had below-average percentages of underwater homeowners and distressed sales, the index noted.
Market experts agreed that the housing recovery is hyper-local as a result of simple supply and demand, and going forward, they are not worried about any serious bumps in the housing recovery.
"When prices start going up, more houses go on the market and more homeowners enter into the market because of confidence," said Realogy NRT senior vice president of strategic initiatives Monty Smith.
He concluded, "Other than macroeconomic forces that our out of our control such as unemployment and interest rates, we don’t see anything that would change the current positive trend lines we are seeing."