Despite market reports of strong median home price appreciation this spring, gains are very uneven and nearly half of homes in ten of the nation’s largest markets actually lost value in May. On a house-by-house basis, about one-third fewer homes in the largest markets gained value during the heart of the spring buying season this year compared to last, according to Weiss Residential Research’s Indexes.
Only 54 percent of homes in the markets appreciated during May compared to 81 percent in May 2014, a sign that the downward trend may continue in the coming months. In Denver, the hottest market in the nation, 84 percent of houses appreciated in May compared to 95 percent last year. In the Washington, DC market, weakest of the top ten, only 34 percent of houses gained value in May compared to 57 percent in May 2014.
“Don’t be fooled by averages,” said Allan Weiss, founder and CEO of Weiss Residential Research. ‘All of the largest metro indexes are rising more slowly than they were a year ago though market reports give the impression that values are rising across the board. However people don’t own the entire market, they own one house.”
Larger homes are having a harder time than smaller homes with two bedrooms or less. In Denver, larger homes appreciated 5.8 percent on a year over year basis in May compared to smaller homes. In Washington, DC, larger homes actually fell -0.7 percent. Smaller homes declined less, -0.2 percent year over year.
Same Pattern as the Housing Crash
In a metro like DC with a median price increase of 1.2 percent in the past year according to Case-Shiller, 60 percent of the houses are rising and the other 40 percent are stagnant or falling. Since the ones that are appreciating outnumber the ones falling the average is a low positive number, Weiss said.
“The same pattern occurred before the great housing meltdown ten years ago. The percent of houses rising in DC declined from 100 percent to 60 percent while the metro index showed a slowdown but did not go negative. Once the population of houses that had been rising fell below 50 percent, the index began its descent,” Weiss said.