Top 10 towns with turnaround housing markets
(MoneyWatch) Talk about a turnaround.
Home prices in these 10 cities have jumped as much as 44 percent over the past year, driven upward by small supply and big demand.
The evidence for both lies in inventory. In these places, the number of homes for sale is shrinking, but so is the time they spend on the market.
"When inventory is low and age of inventory is low, that means there are more buyers out there snapping up properties at the price point offered so homes aren't sitting on the market," said Leslie Piper, Realtor.com's consumer housing specialist. "That's the balance you want."
Nationally, inventory has dropped 3.3 percent, but even more telling is the drop in age of inventory, which has declined 17.7 percent in the third quarter of 2013 over the same period last year, according to a Realtor.com Turnaround Towns report. Typical homes spent about 84 days on the market between July and September, while last year they spent 102 days on market.
So the 10 towns on this list have seen big jumps in the median list prices, as well as drops in the amount and age of inventory, meaning that these housing markets are undergoing a major recovery and are doing it quickly.
But that doesn't mean they're in the clear: Some, such as Las Vegas, still have a long way to go before the huge swath of homeowners affected by the crash recover their original home values, if they ever do. And others, such as Boston, may be affected by the lack of affordable housing options in the coming months.
But at least for now, things are looking up for the housing market in these 10 towns.
Top 10 towns with turnaround housing markets
10. Las Vegas
Las Vegas has long been the poster child for the housing boom and bust. Some estimates saw home values drop more than 70 percent across town. But over the past year, Vegas has gained back 30.8 percent of home values, taking the median list price from $129,000 to $169,000. The number of homes available for sale is decreasing 16.9 percent and the overall age of the stock is also decreasing 23.5 percent.
Top 10 towns with turnaround housing markets
9. Boulder, Colo. area
Boulder's list price is up 12.5 percent from last year -- from $319,000 to $359,000 -- and is driven by tight inventory. The inventory of homes for sale declined 18.1 percent since last year and age declined 35 percent. Those drops were amplified by massive flooding this September, further limiting the number of homes for sale.
Top 10 towns with turnaround housing markets
8. Boston area
The greater Boston area is one of the nation's healthiest real estate economies, and it was barely affected by the housing crash. Even so, Boston's list price is up 9.5 percent from $314,900 last year to $344,900 today, while inventory is down 22.1 percent and the age is down 30.7 percent. However, with median list prices that high, affordability has become a major issue and may hamper price growth in the future.
Top 10 towns with turnaround housing markets
7. West Palm Beach/Boca Raton, Fla.
Even though they are two of the wealthiest resort areas in the country, West Palm Beach and Boca Raton have had a particularly rough go of it in the past few years. But Florida is starting to follow California on the path to recovery and this area is no different.
Inventory fell 20.7 percent since last year, and the age of inventory also dropped 21.8 percent. Home prices climbed 17.4 percent to $229,000 from $195,000 last year.
Top 10 towns with turnaround housing markets
6. Dallas
Dallas was one of those rare towns like Boston that didn't have much of a housing boom or bust. Because it didn't fall much, it didn't need to recover much.
Nonetheless Dallas saw prices rise 10.6 percent over last year -- from $189,000 to $210,000 -- and inventories are down 15.72 percent while the age is down 32 percent. But inventories actually rose from the second quarter to the third quarter this year by 3.1 percent, so that may dampen home prices.
Top 10 towns with turnaround housing markets
5. Ann Arbor, Mich.
Known primarily as the home of the University of Michigan, this smaller city's housing recovery has been led by both shrinking inventory and a strengthening economy. Inventory has decreased 13.5 percent while the age has dropped 28.7 percent. Home prices are up 15.2 percent from $164,900 to $190,000.
Top 10 towns with turnaround housing markets
4. Fort Lauderdale, Fla.
Down 13.8 percent this quarter compared to year-ago levels, Fort Lauderdale's inventory shortfall has lit a fire under once-lagging prices. The region is experiencing a more buyer-leaning marketplace, with reports of sellers in Fort Lauderdale offering incentives to purchase, such as seller contributions to buyers' closing costs and allowances for upgrades and renovations, according to the Realtor.com report.
That appears to be working to some degree, as inventory age dropped 35 percent over last year and home prices grew 15.8 percent, from $155,000 to $179,500.
Top 10 towns with turnaround housing markets
3. Reno, Nev.
Although Reno has always stood in the shadow of Las Vegas, its recovery is standing out on its own. Home prices have risen 28.2 percent from $195,000 to $249,900, meaning that it's now cheaper to buy a home in Vegas than Reno. Inventory has fallen 19.8 percent over last year, and the housing stock is 30.43 percent younger than last year.
Top 10 towns with turnaround housing markets
2. Santa Barbara, Calif. area
Santa Barbara is the only California town on the list, as most of the cities from the Golden State have already moved through a stage of accelerated recovery and have achieved a steadier pace of recovery. But Santa Barbara is still seeing big increases in home prices, to the tune of 27 percent. That takes the median list price in Santa Barbara from $549,000 to $697,777 -- the most expensive on this list.
Inventory dropped this year 15.9 percent and the age of inventory dropped 34 percent, meaning that homes stay on the market an average of just 41 days in the city, down from 62 and the smallest number of days on market in this list.
Top 10 towns with turnaround housing markets
1. Detroit, Mich.
Detroit has long been struggling with an economic crisis. But the Motor City has actually turned around its housing markets. Instead of sinking when the city of Detroit had just filed for bankruptcy, its housing market quietly resurged, thanks largely to foreign and corporate investment.
"When you're sort of at the bottom, you can only really rise to the top," Piper said. "I think you're going to continue to see a lot of investors take the risk to get the greatest reward."
She also pointed to a proposal from Barclay's to loan the city $350 million. Even though the city council doesn't like the loan, it speaks to this idea that financial giants are still willing to invest in Detroit, she said.
Younger generations and some start-up companies are willing to set up in Detroit as well, taking advantage of cheap homes, cheap land and cheap rents.
Prices in Detroit are up a whopping 44.3 percent over last year and it trimmed its for-sale inventory and the age of its inventory, down 24.5 percent and 33.9 percent respectively, since last year. Prices are still low for a city of its size, with the median list price at $129,900, up from $90,000 last year.