Higher priced homes are typically a strong indicator of the overall health of a real estate market and, according to Pro Teck Valuation Services, these homes are leading the recovery currently.

"Many of the interior U.S. markets exhibit low volatility and are relatively easy to forecast. Others on the East and West Coast show more volatility due to the combination of constrained supply and generally rising demand," said Tom O’Grady, CEO of Pro Teck. 

"Home prices in these markets rise and fall faster than in markets where new supply can be more easily added such as the more open Midwest U.S."

Pro Teck tracks a number of market indicators to predict where home prices are going in their Home Value Forecast. Partnering with Collateral Analytics for this report, Pro Teck studies the single-family price per square foot for different priced markets in the Los Angeles County areas of Manhattan Beach, Lancaster and Burbank from 1970 to 2012.

These markets specifically were chosen because they represent a range of low, average and high-priced cities. This allows for a clear pattern to be established over the years, revealing the higher-priced cities taking the lead, followed by the average and then the low-priced ones.

"Most newsworthy is the latest up move in the Manhattan Beach market which has pushed prices to all-time high levels," said Michael Sklarz, principal of collateral analytics to the Home Value Forecast.  "This should be viewed as confirmation that the Los Angeles county real estate market is in the early stages of a new upward-cycle in home prices."

The HVF also tracks the top 10 best and worst performing metros based on single-family home markets in the top 200 core based statistical areas on a monthly basis.

The metros are chosen based on sales/listing activity and prices, months of remaining inventory, days on market, sold-to-list price ratio and foreclosure and REO activity.

"Three of the top ranked markets are in Southern California while another two are in Massachusetts. A new entrant to the Top 10 list this month is Indianapolis-Carmel," added Sklarz.

Big markets such as Phoenix and Sacramento, which led the lists towards the end of 2012, no longer make the list due to their year-over-year sales counts being down. This is due to the lack of inventory rather than a decrease in demand, Sklarz noted.

"The bottom-ranked metros also represent an interesting mix with two being in the upstate New York area and two in Louisiana with higher months of remaining housing inventory."