Pro Teck: Just One East Coast Metro in Top Markets

We’ve heard–and seen–a lot of data about the strength of housing markets in the South and Western United States. So when a top market appears on the east coast, it’s worth a look.

Pro Teck Valuation Services, Waltham, Mass., looks at a successful east coast housing market, the Research Triangle area of North Carolina, in its current Home Value Forecast. Tom O’Grady, CEO of Pro Teck, said the Durham/Chapel Hill metro boasts a number of positive attributes that allow its housing market to thrive: the presence of a nearby university system (Duke University and the University of North Carolina) and high-tech, medical and banking industry companies that have moved into the area to employ skilled graduates.

“There’s a reason why the Research Triangle is known as the land of tees, trees and PhDs,” O’Grady said. “In years past one would have to move to the Northeast to find high tech careers. Today, companies have moved to where employees can enjoy all that comes with living in the North Carolina countryside.”

Pro Teck said the Durham-Chapel Hill real estate market has been driven by market fundamentals and didn’t experience violent swings in home prices that other metro areas did during the Great Recession. When looking at home price versus employment for the area, both track each other nicely, with no “bubble” in price that can’t be explained. The same correlation can be seen in household income and home price per square foot, the report said.

“Looking at the data, one can see the Durham-Chapel Hill CBSA is a healthy market driven by classic supply and demand fundamentals,” O’Grady said. “In contrast, one can look at the ‘bubble’ in home prices in Miami from 2003-2007 that didn’t have a corresponding increase in employment–that’s when the trouble starts.”

The report, which ranks single-family home markets in the top 200 CBSAs, said other strongest-performing metros in June were Yuba City, Calif.; Mount Vernon, Wash.; Colorado Springs, Colo.; Eugene, Ore.; Vallejo, Calif.; Olympia, Wash.; and Modesto, Stockton and Fresno, Calif.

The report noted Yuba City, 40 miles north of Sacramento, was hit hard by the housing crisis, with REO sales as a percentage of total sales at more than 60 percent in 2008. In June, that number fell to 4.43 percent well within historic norms. “Today, Yuba has a very limited housing supply, with only 2.5 months of remaining inventory,” the report said. “With such limited supply, prices should continue to rise.”

At the other end, bottom 10 metros in June were McAllen, Texas; Albany, N.Y.; Huntsville, Ala.; Midland, Texas, Madison, Wis.; Gary, Ind.; Atlantic City, N.J.; Jackson, Mich.; Jacksonville, N.C.; and Flint, Mich.

The report noted in Atlantic City, home prices are down more than 12 percent from last year and foreclosure sales as a percentage of total sales is high (44.87 percent) and growing-“not a good sign for the future,” O’Grady said. “Fortunately, the PILOT rescue bill recently passed by the New Jersey Legislature calling for the casinos to pay $120 million annually for 10 years should help stabilize the city’s finances and keep it from filing for bankruptcy.”