US rents are rising faster than house prices, according to Trulia.
The site's latest price and rent monitor show that that the average asking price for US homes increased by 0.3 per cent in June, the fourth monthly rise out of the past five months. On a quarterly scale, prices jumped by 0.8 per cent, while excluding foreclosures, asking prices were 1.7 per cent above June 2011. Nationally, 44 out of the 100 largest metros had annual price increases, seasonally adjusted.
But despite widespread national asking price rises, rent increases outpaced price increases in 22 of the 25 largest rental markets, adds the report. Nationally, rents were 5.4 percent higher in June than they were a year ago, and rents increased year-on-year in 24 of the 25 largest rental markets - all except Las Vegas. Furthermore, rent increases accelerated between March and June in most rental markets, with rents in San Francisco rising 14.7 per cent annually in June from 10.9 percent in March.
Prices were up by 15 percent or more in Phoenix and Miami compared to last year. However, seven of the 10 metros with the largest increase in asking prices also have a high share of homes in foreclosure, including Phoenix, the Florida metros, and Detroit and its suburbs. These coming foreclosures threaten to reduce or reverse recent price gains in those markets. In contrast, Denver, San Jose, Pittsburgh, Little Rock, Austin and Colorado Springs all had price gains of more than 4 percent with a moderate or low share of homes in foreclosure.
"We saw asking prices start to rise in February and predicted that other home price indexes would report sales price increases this summer for those homes - and they have," said Jed Kolko, Trulia's Chief Economist. "Since February, asking prices showed solid gains in four out of five months, including in June, so I expect to see the sales-price indexes show further increases in the months to come."
"The huge price gains we've seen in Miami and Phoenix are not built to last. These increases will shrink or reverse as the backlogged foreclosures in these metros hit the market," said Jed Kolko, Trulia's Chief Economist. "In contrast, Denver, San Jose and Austin, which were spared the worst of the housing crisis, have strong price growth and strong job growth without a foreclosure overhang. Their recent price gains are less dramatic than Miami and Phoenix but are less at risk. Slow and steady wins the housing recovery."
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