While pundits highlight continued gains, April data is mixed.
- April marks the sixth consecutive month of softening quarterly appreciation for the nation. While single-digit and percentage point gains can rally consumers, the overall health and recovery of the market is far from a sure thing. National home prices through April 2015 are up 5.1% year-over-year, while the quarterly rate of growth continued its path to normalization coming in at 0.5%. Suggestions that the market continues to recover at the clip we saw in 2012-2013 is misleading.
- While early predictions called for gains in the Midwest, the region remains volatile. Most of the regions sustained price growth through the winter, while the Midwest is already seeing negative quarterly declines of -0.10%. For nearly seven years, it has struggled to get on equal footing with the nation. Still in the wake of the worst housing crash in modern history, the Midwest’s regional legacy has made gains all the more difficult to hang on to.
- Within the top performing markets for April, eight are Western markets. While the West’s market-by-market performance may exceed the other regions, gains have been softening since the beginning of 2014—hence softening gains at the national level.
- Three Florida markets that rank among the top performers boast high levels of distressed saturation (REO and short sales). All three markets have distressed saturation rates that are at least 10 percentage points higher than the national level, at 16.5%, suggesting growth is dependent on a higher propensity of distressed inventory in this area.
- REOs are now part of the consumer lexicon. In this recovery, the stigma once associated with REOs (poor condition, buyer beware) has turned around. Today, REOs and short sales signal opportunity to investors and traditional homebuyers alike, and an indication that market-level gains could be ahead. The Jacksonville, FL MSA’s overall market performance, including low and distressed sales, shows quarterly growth of 1% and yearly growth of 6.8%. This is nearly double that of the MSA’s fair market performance at .5% quarterly growth and 3.7% yearly growth—more evidence that Jacksonville’s performance relies on distressed opportunities. See Graph 1.
- San Francisco MSA behavior offers more grounds for continued moderation across the country. The MSA is posting quarterly growth of 0.8% and yearly growth of 8.6%. While at first blush, this sounds pretty healthy for winter, a steady decline in quarterly performance over the past two years is on track with historical appreciation rates for the MSA.
“While spring brings renewed confidence and demand, the numbers through April are mixed,” says Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital. “Sales may be up, but subsiding gains imply the recovery is at a critical inflection point. As the market normalizes—a good thing for housing overall—small losses could have greater impact, forcing a standstill or even worse, a return to negative territory in certain areas across the country.
“Confidence is down in April, suggesting consumers aren’t quite convinced that the economy, much less housing, is as rosy as some early spring metrics suggest. Yet, we continue to see blooms of opportunity as distressed properties continue to provide fertile ground for investors of all sizes to take advantage of a red hot rental market. As we saw back in early 2013, this type of inventory can be the catalyst that revives confidence and re-engagement.
While gains and subsiding losses in the here-and-now are both good signs of a normalizing market, making sense of the numbers to reveal underlying trends is key for all market participants. Bottom line, the early spring numbers are encouraging but rest assured, the overall market is far from being ‘back to normal’. There is reason to be hopeful, but arm yourself with accurate data and remember to read headline numbers with the right perspective.”
Graph 1. Appreciation in price trends for the all-transaction series suggests continued performance relies on distressed sales in Jacksonville, FL — April 2015. Source: Clear Capital
| National and Regional Markets | ||||||||||
| Market | Qtr/Qtr% +/- | Yr/Yr | Distressed Saturation | |||||||
| National | 0.5% | 5.1% | 16.5% | |||||||
| West | 1.1% | 7.4% | 12.5% | |||||||
| Northeast | 0.3% | 2.4% | 12.2% | |||||||
| South | 0.6% | 5.4% | 20.8% | |||||||
| Midwest | -0.1% | 4.7% | 18.0% | |||||||
Chart 1: National and Regional Markets – April 2015. Source Clear Capital
| Highest Performing Major Metro Markets | ||||||||||
| Rank | Metropolitan Statistical Area | Qtr/Qtr% +/- | Yr/Yr | Distressed Saturation | ||||||
| 1 | SEATTLE, WA—TACOMA, WA—BELLEVUE, WA | 1.6% | 9.8% | 15.9% | ||||||
| 2 | PITTSBURGH, PA | 1.6% | 15.1% | 12.7% | ||||||
| 3 | HOUSTON-BAYTOWN-SUGAR LAND, TX | 1.5% | 11.2% | 4.7% | ||||||
| 4 | DENVER-AURORA, CO | 1.3% | 10.2% | 9.1% | ||||||
| 5 | FRESNO, CA | 1.3% | 7.7% | 18.5% | ||||||
| 6 | MIAMI-FORT LAUDERDALE-MIAMI BEACH, FL | 1.2% | 9.8% | 28.3% | ||||||
| 7 | LOS ANGELES-LONG BEACH-SANTA ANA, CA | 1.2% | 8.2% | 11.1% | ||||||
| 8 | PHOENIX, AZ—MESA, AZ—SCOTTSDALE, AZ | 1.1% | 5.9% | 12.9% | ||||||
| 9 | JACKSONVILLE, FL | 1.0% | 6.8% | 35.8% | ||||||
| 10 | RIVERSIDE, CA—SAN BERNARDINO, CA—ONTARIO, CA | 1.0% | 8.3% | 15.1% | ||||||
| 11 | NASHVILLE-DAVIDSON–MURFREESBORO, TN | 1.0% | 8.1% | 12.2% | ||||||
| 12 | NEW YORK-NORTHERN NEW JERSEY-LONG ISLAND, NY-NJ-PA | 0.9% | 5.1% | 13.3% | ||||||
| 13 | SACRAMENTO, CA—ARDEN, CA—ROSEVILLE, CA | 0.9% | 6.7% | 15.5% | ||||||
| 14 | TAMPA, FL—ST. PETERSBURG, FL—CLEARWATER, FL | 0.9% | 6.8% | 32.6% | ||||||
| 15 | SAN DIEGO, CA—CARLSBAD, CA—SAN MARCOS, CA | 0.9% | 6.3% | 10.8% | ||||||
Chart 2: Highest Performing Major Metro Markets – April 2015. Source Clear Capital
| Lowest Performing Major Metro Markets | ||||||||||
| Rank | Metropolitan Statistical Area | Qtr/Qtr% +/- | Yr/Yr | Distressed Saturation | ||||||
| 1 | PROVIDENCE-NEW BEDFORD-FALL RIVER, RI-MA | -3.7% | -10.9% | 20.1% | ||||||
| 2 | BIRMINGHAM-HOOVER, AL | -1.4% | -0.1% | 17.4% | ||||||
| 3 | HARTFORD-WEST HARTFORD-EAST HARTFORD, CT | -1.0% | 5.5% | 18.8% | ||||||
| 4 | BALTIMORE-TOWSON, MD | -0.7% | -2.2% | 29.4% | ||||||
| 5 | CLEVELAND, OH—ELYRIA, OH—MENTOR, OH | -0.4% | 2.6% | 23.9% | ||||||
| 6 | MILWAUKEE-WAUKESHA-WEST ALLIS, WI | -0.3% | 4.7% | 23.4% | ||||||
| 7 | NEW ORLEANS-METAIRIE-KENNER, LA | -0.3% | 5.0% | 24.0% | ||||||
| 8 | DETROIT, MI—WARREN, MI—LIVONIA, MI | -0.2% | 14.0% | 22.8% | ||||||
| 9 | BOSTON-CAMBRIDGE-QUINCY, MA-NH | -0.1% | 1.2% | 11.7% | ||||||
| 10 | LOUISVILLE, KY | -0.1% | 3.5% | 17.8% | ||||||
| 11 | CINCINNATI, OH—MIDDLETOWN, OH | 0.0% | 5.0% | 23.3% | ||||||
| 12 | MEMPHIS, TN | 0.0% | 5.5% | 29.3% | ||||||
| 13 | ROCHESTER, NY | 0.1% | 0.6% | 12.7% | ||||||
| 14 | TUCSON, AZ | 0.3% | 4.1% | 18.5% | ||||||
| 15 | WASHINGTON-ARLINGTON-ALEXANDRIA, DC-VA-MD-WV | 0.3% | 2.8% | 16.6% | ||||||
Chart 3: Lowest Performing Major Metro Markets – April 2015. Source Clear Capital
About the Clear Capital Home Data Index (HDI) Market Report
The Clear Capital HDI Market Report provides insights into market trends and other leading indices for the real estate market at the national and local levels. A critical difference in the value of the HDI Market Report is the capability of Clear Capital to provide more timely and granular reporting than nearly any other home price index provider.
The Clear Capital HDI Market Report
- Offers the real estate industry (investors, lenders, and servicers), government agencies, and the public insight into the most recent pricing conditions, not only at the national and metropolitan level, but within local markets as well.
- Is built on the most recent information available from recorder/assessor offices, and then further enhanced by adding the company’s proprietary streaming market data for the most comprehensive geographic coverage and local insights available.
- Reflects nationwide coverage of sales transactions and aggregates this comprehensive dataset at ten different geographic levels, including hundreds of metropolitan statistical areas (MSAs) and sub-ZIP code boundaries.
- Includes equally-weighted distressed bank owned sales (REOs) from around the country to give the most real world look of pricing dynamics across all sales types.
- Allows for the most current market data by providing more frequent updates with patent pending rolling quarter technology. This ensures decisions are based on the most up-to-date information available.
Clear Capital HDI Methodology
- Generates the timeliest indices in patent pending rolling quarter intervals that compare the most recent four months to the previous three months. The rolling quarters have no fixed start date and can be used to generate indices as data flows in, significantly reducing the multi-month lag time experienced with other indices.
- Includes both fair market and institutional (real estate owned) transactions, giving equal weight to all market transactions and identifying price tiers at a market specific level. By giving equal weight to all transactions, the HDI is truly representative of each unique market.
- Results from an address-level cascade create an index with the most granular, statistically significant market area available.
- Provides weighted repeat sales and price-per-square-foot index models that use multiple sale types, including single-family homes, multi-family homes, and condominiums.
