If you’re looking for the source of this year’s home price recovery, look West.
Western cities are recovering strongly after being hit hardest during the real estate bust. The trend was confirmed Tuesday with the release of the Standard & Poor's/Case-Shiller index of 20 large cities. The index was down 0.1% in October from September but up 4.3% compared with October 2011.
San Francisco and Phoenix have both rebounded from their most recent lows. The two cities are up 22.5% and 22.1%, respectively. The improvement in those two cities illustrates distinct real estate trends on the West Coast.
The San Francisco example shows how coastal markets in California are rising sharply even as inland areas lag behind. The San Francisco metro area is one of the most desirable housing markets in the nation.
The Bay Area’s economy, and the housing market there, have also been boosted by the strength of the technology industry.
Phoenix, on the other hand, has recovered sharply as investors have poured into that market looking for homes to buy on the cheap, renovate and then either rent out or sell.
Investors in the Phoenix area made about 37.2% of all home purchases last month, according to research firm DataQuick, that number has declined as buyers intending to find a place to live have been lured back to the market. The peak for absentee-buyer purchases in the Phoenix area was March of last year, with investors snapping up 47.1% of all homes that month.
According to the Case-Shiller data released Wednesday, prices in the Los Angeles metro area are up 10.5% from their bottom and up 12.2% in San Diego.
In terms of month-over-month gains, Las Vegas posted the strongest increase up 2.8% in October over September. That city also hit an important benchmark in October, rising above its January 2000 index level for the first time in 22 months.
Of all the cities, Chicago was the weakest with prices dropping 1.5% month over month, while Boston was a close second, falling 1.4%.