Best US Housing Markets for Buyers and Sellers

"Much of that strength is driven by investor interest, as many distressed and non-distressed homes are purchased and transformed into rentals," says Stan Humphries, Zillow's chief economist, in the report. "This investor activity is contributing to very low inventory levels, which increases demand and helps drive up prices, particularly for less expensive homes in these markets."

(Read More: Housing's Recovery Means Fewer Can Afford Home)

The best buyers' markets are equally surprising, with Chicago, Cleveland and Philadelphia topping the list.

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A Tale of Two Housing Markets: Single and Multi Family

The numbers are in, the analysts are out, and given the volatility of this particular economic indicator, the spin is at full speed:

“Good News on Housing Permits More Than Offsets the Bad News on Starts”— HIS Global Insight

“Housing Starts Decline Again” – Capital Economics

“March Multifamily Starts Down; Permits Continue Upward Trend”— KBW

“March Construction Numbers Aren’t As Bad as They Look”— Trulia.com

“Housing Starts Lacking Consumer Confidence” — Sageworks Inc.

Here’s the problem: We are living a tale of two housing markets, single and multi-family. Depending on what kind of builder or investor you are, you’re going to see the housing starts numbers differently. Let’s weed through it first:

Total starts fell 5.8 percent, driven by a nearly 20 percent drop in multi-family. Single family was essentially flat month-to-month. But remember, multi-family is a very volatile number and can swing 20-30 percent monthly due to large local projects. Yes, they are both ahead from last year, but 2011 was the worst year in the history of U.S. home building.

“The further fall in housing starts in March means that about a third of the past year’s improvement in homebuilding has now been undone. But the continued rise in building permits is an encouraging sign which suggests that housing starts will improve again later this year,” writes Paul Diggle at Capital Economics.

Building permits are always seen as a better indicator of construction, or at least more dependable and less influenced by weather. Single family permits dropped 3.5 percent month to month, but multi-family surged ahead 24 percent to the highest level in four years.

“The pickup in multifamily construction is taking place most noticeably in the South and West—again, not a big surprise—since 46 of the 50 fastest-growing metro-area populations from 2010 to 2011 were in the South or West, according to the Census Bureau,” writes IHS Global Insight’s Patrick Newport.

Clearly we’re still seeing big demand in the multi-family sector, but single family is still faltering.

“Single family is more of a restocking issue,” said Morgan Stanley’s Oliver Chang on CNBC. “In order to meet baseline demand, they [builders] have to build.”

Chang says real growth in single family demand just isn’t there, due to a still tightening credit market. On the flip side, he claims that distressed housing has stabilized and distressed home prices have bottomed; that’s because investors largely use cash.

So if there’s all this demand for single family rentals, and investors are rushing to get in, is there still enough demand for all this multi-family construction?

“Bottom line, with the secular decline in home ownership, multi-family construction will be where it’s at for a few years but still only make up about 30 percent of total starts. Single family starts still have the intense competition with foreclosures and now rent seekers,” writes Peter Boockvar of Miller Tabak.

So why, as we asked yesterday after the disappointing builder sentiment report, did single family starts, permits and sentiment rise through the fall and the winter only to slam on the breaks? Newport calls that one a “head scratcher,” and adds, “If the builders have gotten ahead of the game, single-family construction will go through a demoralizing slowdown later this year.”

Questions?  Comments?  document.write("");document.write("RealtyCheck"+"@"+"cnbc.com");document.write('');And follow me on Twitter @Diana_Olick

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[Manhattan Absorption - January 2011] A Bounty Of More Absorbent Markets

Absorption defined for the purposes of this chart as: Number of months to sell all listing inventory at the annual pace of sales activity. I started this analysis in August 2009 so as of late I am able to show side-by side comparisons. The blue line that shows the 10-year average travels up and down because of the change in scale caused by some of the significant volatility seen at the upper end of the market.

The absorption rate across all price points under $3M are generally below the 10-year average. Conditions in January were generally better than during the same period a year ago although the east side saw less improvement than downtown and the west side.

[click images to expand]

Manhattan Absorption Archive 2011 [Miller Samuel]
Manhattan Absorption Archive 2010 [Miller Samuel]

Note: This chart series does not include shadow inventory (properties ready for market but not yet listed for sale) so this anlaysis understates the rate of condo absorption. The Uptown (Northern Manhattan) data set is too thin for a reliable presentation.

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Top Ten Most Searched <b>Real Estate</b> Markets in 2010 | RISMedia

RISMEDIA, January 12, 2011—While many real estate markets in 2010 experienced extraordinary highs and lows in response to tax credits, low interest rates and price swings, consumer interest in real estate remained consistent. Las Vegas and Los Angeles came in as the first and second most searched markets every month in 2010, while Orlando, San Antonio and Miami vied as the third, fourth and fifth most searched cities respectively. Phoenix, San Diego, Austin, Tampa and Chicago, in that order, held the sixth through tenth positions as the most searched markets in 2010.

The top ten most searched real estate markets in 2010 were established based on the number of visitors that viewed properties in each Metro Service Area (MSA) in the United States from January 2010 to December 2010 on Realtor.com, one of the leading homes-for-sale websites operated by Move, Inc., a leader in online real estate.

In early 2010, home sales and prices rose throughout the country faster than they had for several years. This was largely in response to the Federal home buyer tax credit for first-time and repeat buyers. After the Federal home buyer tax credit expired at the end of April 2010, sales slowed throughout the country in summer and fall 2010—even though mortgage rates remained low, and dropped below 4% in the fall. List prices and actual sale prices continued to fluctuate in response to sales, foreclosure, and other trends throughout 2010.

Despite changing market conditions in 2010, the nation’s most searched destinations remained remarkably consistent, focusing on the sunshine states of California, Nevada, Florida, Texas and Arizona.

“Online search is a critical measure of interest in real estate, especially now that more than 90 percent of buyers search for their homes online,” said Realtor.com President, Errol Samuelson. “As the number one homes for sale website, searches on Realtor.com show us where the highest potential for activity is across the country. Changing conditions throughout 2010 in the sunshine states resulting from foreclosures, the tax credit, interest rates and other factors created more interest in real estate compared to other states that we hope leads to increased activity and sales in 2011.”

For more information, visit www.Realtor.com and www.move.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

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