Posturing for Progress

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The latest s e c on da r y m a r k e t a na ly t ic s Se r v ic i ng Or ig i nat ion SERVICING Job Recovery Boosts Asking Price Growth Trulia draws a link between employment and asking price gains in solid markets. A sking home prices posted the strongest gains in cities where job growth was also solid, according to Trulia. In a recent report, Jed Kolko, Trulia's chief economist, provided two reasons to explain the link between jobs and housing: Job growth attracts newcomers to an area, who look for housing, 42 | The M Report and job finders often look for their own place to rent or buy. "Job growth helps the housing recovery by increasing people's spending power and confidence in making long-term investments," he said. "Young adults with jobs are much less likely to live with their parents than those without jobs. Furthermore, stable jobs will set this generation free to form their own households and start thinking about homeownership." According to Trulia, this means the increase in prices is driven by more than investors. "Investors don't deserve all the thanks—or blame—for rising prices. Households are doing their part, too, as the economy recovers and more people go back to work and get on more solid financial footing. Local markets with strong job growth will see home prices continue to recover even after investors decide to cash out their gains and exit the market," Kolko said. In April, asking home prices— which act as an early indicator of price trends—climbed 8.3 percent year-over-year, according to Trulia. Month-over-month, asking home prices inched up by 1.3 percent. In Las Vegas, asking home prices surged 28.5 percent, the highest out of any other metro. Citing March data from the Bureau of Labor Statistics, Trulia also reported job growth in Las Vegas increased 2 percent yearover-year, while the nationwide average was 1.5 percent. Oakland, California, came in second after asking prices surged 26.3 percent year-over-year in April, with job growth in the area totaled 2.2 percent. In Sacramento, asking prices spiked 25.6 percent, while job growth was 1.7 percent. Rounding out the top five were Phoenix and San Jose, where asking prices rose 23.3 percent and 22.9 percent, respectively, and job growth posted at 2.3 percent and 3.2 percent. Among the top 10 ranking metros where asking prices improved the most, Warren, Michigan, was the only metro to see below average job growth. In the area, asking prices were up 18 percent, placing it at No. 10, but job growth was just 0.3 percent from a year ago. Trulia also tracked rent prices in 25 of the largest rental markets and found rents grew 2.4 percent nationwide. However, rent growth was found to be slower year-over-year in April in 19 of the markets compared to January. In Houston, rents grew 9.7 percent from a year ago and rose faster than asking prices, which increased 7.6 percent. Chicago and Philadelphia also saw rent gains exceed improvements in asking prices. On the other hand, Las Vegas and San Francisco experienced rent declines of 1.4 percent and 3.4 percent, respectively, while asking prices shot up by 28.5 percent and 18.1 percent.

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