The housing recovery is well under way, according to the latest and best indicator of house prices. And it's more widespread than ever.
Prices on a per-square-foot basis are up in 86 of the nation's 109 most-active "core-based statistical areas," according to data collected as of Nov. 1 by Pro Teck Valuation Services of Waltham, Mass.
Uncle Sam defines a CBSA as a geographic "micropolitan" area of at least 10,000 people who are tied to an urban center by commuting. In nearly a fifth of the nation's CBSAs, prices are absolutely booming, rising by double digits.
Year over year, the median price of a house in the Phoenix-Mesa-Glendale market in Arizona was up a whopping 35.82 percent per square foot as of Nov. 1. At the same time, the median in Cape Coral-Fort Myers, Fla., was up 25.11 percent per square foot. And it was up 22.3 percent in Tucson, Ariz.
Price per square foot is a better standard on which to judge the trajectory of housing prices because it adjusts for product mix. Other measures are influenced by the number of sales. And too many deals in one price bracket or another can produce a false reading.
For example, if there are an inordinate number of high-end sales during the period studied, the average price of all the houses sold -- or even the median -- will appear much higher than it really is. An unusually large number of sales at the low end will produce a figure that is too low.
But the median square-foot price tends to even things out. By "normalizing" for swings in the type and size of houses sold, it represents a truer picture of the market.
Pro Teck's figures also are more current and detailed than any of the other indexes you might hear or read about. Whereas the others are often three months old -- and some may be an ancient six months late -- Pro Teck's figures are updated at least daily from 850 multiple listing services nationwide. And because the sources of the data are so widespread, the Massachusetts company's figures are more detailed, drilling down, down, down to the ZIP code and even neighborhood level, where they are most helpful.
National numbers are great for headlines, but they don't tell buyers and sellers what's going on where they live. Even on a square-foot basis, national numbers are all but meaningless.
For example, the mythical cost per square foot nationally is $90. That's an increase of 4.5 percent, from $84 as of Nov. 1, 2011. But that means little. After all, who lives in Nationally, USA?
Isn't it better to know that in the last year, the median price of houses in the North Port-Bradenton-Sarasota portion of southwest Florida where you reside -- or want to reside -- rose 10.4 percent per square foot? Armed with that kind of information, you'd know that if you wanted to buy a 3,000-square-foot house in Sarasota, you could expect to pay roughly $3,000 more.
Southwest Florida is just one of 20 CBSAs where prices have increased by double digits in the last year. Many of those were hit hardest during the downturn. Now they are recovering at a rather fast clip, probably because most of the foreclosures have been lapped up by bargain hunters and investors.
Whether they continue to do well will depend on two things: when would-be sellers decide that prices have risen enough for them to actually put their homes on the market, thereby relieving some of the pressure on supply, and whether there is an abundance of still-to-be-foreclosed houses, the so-called shadow inventory, waiting in the wings.
For the most part, increases in per-square-foot prices tend to correlate well with median prices. But not always.
In the Detroit-Livonia-Dearborn, Mich., CBSA, for example, the median price per square foot was up 16.85 percent from Nov. 1 a year ago. The median price of houses sold in the Detroit market during the same period was up 16.58 percent.
But in the Bethesda-Rockville-Frederick CBSA in Maryland just outside of Washington, D.C., the median price of homes sold was up 4.74 percent, whereas the median price per square foot was up 12.44 percent, an almost threefold difference.
Some of the more noteworthy gains in the last year include the Las Vegas-Paradise CBSA in Nevada, where the median price per square foot is up 10.76 percent, from $67 to $75. In West Palm Beach-Boca Raton-Boynton Beach, Fla., the median rose 13.5 percent per square foot, from $95 to $108.
The price trend in the Boston area, on the other hand, has remained essentially flat over the last 12 months. In the Boston-Quincy CBSA, the square foot price did not move from $189. In the Peabody and Springfield CBSAs, it dipped $1, from $182 to $181 and $126 to $125, respectively. And in Worcester, Mass., it was down $3, from $132 to $129.
Nationally, the most expensive houses are in the San Francisco-San Mateo-Redwood City CBSA, where the median price per square foot is $472, up 8.15 percent from $437 a year ago. But another Northern California CBSA -- San Jose-Sunnyvale-Santa Clara -- isn't far behind at $457 a foot, a 19.65 percent jump from $382.
At the other end of the price spectrum, the least expensive market of the 109 most active is the Detroit CBSA, where the median price per foot is a mere $51. The next cheapest CBSA is Palm Bay-Melbourne-Titusville, Fla., at $56 a square foot.
Top 10 Price Gains (median price per square foot)
Nov. 1, 2011 Nov. 1, 2012 Percentage change
Phoenix-Mesa-Glendale AZ $65 $88 35.82
Cape Coral-Fort Myers FL 58 73 25.11
Tucson AZ 75 91 22.3
San Jose-Sunnyvale-Santa Clara CA 382 457 19.65
Boise City-Nampa ID 72 84 17.18
Detroit-Livonia-Dearborn MI 44 51 16.85
Oakland-Fremont-Hayward CA 214 249 16.18
Warren-Troy-Farmington Hills MI 69 79 13.57
West Palm Beach-Boca Raton-Boynton Beach FL 95 108 13.7
Fayetteville-Springdale-Rogers AR 69 78 13.22
Source: Pro Teck Valuation Services