Market Report

Clear Capital®: Spring Never Quite Sprung.

May marks the fifth consecutive month of declines for national home price gains, while performance at the ZIP code level remains widely variable.

TRUCKEE, Calif. – June 2, 2014 – Clear Capital (www.ClearCapital.com), the premium provider of data and solutions for real estate asset valuation and collateral risk assessment, today released its Home Data Index™ (HDI) Market Report with data through May 2014. Using a broad array of public and proprietary data sources, the HDI Market Report publishes the most granular home data and analysis earlier than nearly any other index provider in the industry.

  • With expectations high heading into spring, it’s been a decidedly underwhelming season. May marks the fifth consecutive month national yearly home price growth has softened. By year’s end, home prices are expected to normalize in the sub 5% annual growth range. Stay tuned for Clear Capital's latest forecast in July’s HDI Market Report.
  • Good deals do exist, but you need to work harder to find them. Savvy investors with deeper market insight into current market dynamics will be rewarded. Despite a lethargic spring buying season, the range of home price growth across the 50 major metro markets may surprise you – 22.3 percentage points over the last year (see Graph 1: MSA vs. ZIP Code Performance). A deeper dive into metro markets' ZIP code price change over the last year reveals a range, from -37% to +45%.
  • The old adage "location, location, location" still applies. Large local market variances like we see in Cleveland, OH are proof of this. When stacked up against other major metro markets, Cleveland has the largest variation in ZIP code performance. The top performing Cleveland ZIP saw 42.3% annual growth, while its lowest performer saw -23.3%. Sure, you can get lucky with a broad market approach in markets like Rochester, NY, where the spread is narrow – just 4.4 percentage points. But this is the exception; given 44 major metro markets saw a spread greater than 15 percentage points over the last year. Even in stronger performing markets, like California and Florida (see Chart 2: Highest Performing Major Metro Markets), there is wide variation at the ZIP code level (see Graph 1: MSA vs. ZIP Code Performance).
  • Contact Alanna Harter for your May 2014 file of the Top 30 MSAs or access our data on the Bloomberg Professional service by typing CLCA <GO>.

"It’s no surprise that the spring buying season isn’t moving the needle this year," said Dr. Alex Villacorta, vice president of research and analytics at Clear Capital. "The rising price floor in the low tier sector of the market has squeezed investor returns, thereby removing a key demand segment. We don't expect to see a large pop in prices through the summer buying season. It's likely we'll keep chugging along at our current pace, somewhere around 1% quarterly gains for the rest of the year.

Considering the number of key housing fundamentals that remain stressed, like millions of borrowers still underwater, high levels of student debt, potential borrowers with less than perfect credit, and a job market that is still recovering, we don’t expect a market with waning investor demand to withstand any eye-popping rates of growth. Although it’s not a quick fix to the larger housing problem, home price moderation is really a healthy move for the market overall. While some might be discouraged by a weak spring buying season, we are encouraged that price trends are finally calibrating back to pre-bubble norms. Despite other headwinds, moderating home prices will serve as the foundation to a more balanced market moving forward.

Remember, we’re still in recovery mode which means deals exist. Market participants just need to look deeper. As softer gains continue to unfold, broad stroke investment approaches will prove less and less fruitful. As such, market participants who pin point investments will be better positioned for success."

Graph 1: ZIP Code Yearly Growth Range within Major Metro Markets.

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 National and Regional Markets
Market   Qtr/Qtr   Yr/Yr
  Distressed Saturation
National   0.9%   9.2%   20.3%
West   1.6%   15.0%   15.9%
Northeast   0.5%   5.2%   15.4%
South   0.8%   8.0%   23.2%
Midwest   0.6%   8.8%   26.1%

Chart 1: National and Regional Markets - May 2014. Source: Clear Capital


 Highest Performing Major Metro Markets
Qtr/Qtr
Rank
  Metropolitan Statistical Area   Qtr/Qtr
% +/-
  Yr/Yr   Distressed Saturation
1   Riverside, CA – San Bernardino, CA – Ontario, CA   2.2%   20.5%   18.0%
2   Miami, FL – Ft. Lauderdale, FL – Miami Beach, FL   2.1%   17.3%   27.3%
3   San Francisco, CA – Oakland, CA – Fremont, CA   2.0%   20.5%   10.2%
4   Los Angeles, CA – Long Beach, CA – Santa Ana, CA   1.7%   18.1%   12.9%
5   San Diego, CA – Carlsbad, CA – San Marcos, CA   1.7%   17.4%   14.3%
6   Orlando, FL   1.7%   14.4%   33.3%
7   Fresno, CA   1.7%   15.8%   22.7%
8   San Jose, CA – Sunnyvale, CA – Santa Clara, CA   1.7%   17.0%   5.7%
9   Bakersfield, CA   1.6%   16.4%   22.6%
10   Boston, MA – Cambridge, MA – Quincy, MA   1.6%   12.2%   13.0%
11   Oxnard, CA – Thousand Oaks, CA – Ventura, CA   1.6%   16.5%   12.5%
12   Sacramento, CA – Arden, CA – Roseville, CA   1.6%   19.2%   18.2%
13   Dayton, OH   1.5%   9.5%   25.5%
14   Las Vegas, NV – Paradise, NV   1.5%   16.5%   26.1%
15   Atlanta, GA – Sandy Springs, GA – Marietta, GA   1.5%   19.2%   23.7%

Chart 2: Highest Performing Major Metro Markets - April 2014. Source: Clear Capital


 Lowest Performing Major Metro Markets
Qtr/Qtr
Rank
  Metropolitan Statistical Area   Qtr/Qtr
% +/-
  Yr/Yr   Distressed Saturation
1   New Orleans, LA – Metairie, LA – Kenner, LA   -1.9%   0.8%   17.1%
2   Memphis, TN   -1.2%   4.1%   30.6%
3   Milwaukee, WI – Waukesha, WI – West Allis, WI   -0.8%   2.7%   25.0%
4   Jacksonville, FL   -0.2%   6.3%   42.1%
5   Hartford, CT – West Hartford, CT – East Hartford, CT   -0.1%   5.0%   18.5%
6   Pittsburgh, PA   -0.1%   -1.0%   16.0%
7   Rochester, NY   0.0%   2.0%   9.9%
8   Birmingham, AL – Hoover, AL   0.2%   4.8%   19.0%
9   Raleigh, NC – Cary, NC   0.2%   3.6%   9.7%
10   Baltimore, MD – Towson, MD   0.3%   4.0%   23.8%
11   Virginia Beach, VA – Norfolk, VA – Newport News, VA   0.5%   5.0%   23.0%
12   Honolulu, HI   0.5%   5.1%   6.5%
13   Richmond, VA   0.5%   4.3%   22.6%
14   Philadelphia, PA – Camden, NJ – Wilmington, DE   0.5%   4.5%   20.3%
15   Louisville, KY   0.5%   5.0%   17.1%

Chart 3: Lowest Performing Major Metro Markets - May 2014. Source: Clear Capital


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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 and short sales) 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.
About Clear Capital

Clear Capital (www.ClearCapital.com) is the premium provider of data and solutions for the mortgage finance industry. The Company's products include appraisals, broker price opinions, property condition inspections, value reconciliations, automated valuation models, quality assurance services, and home data indices. Clear Capital's combination of progressive technology, high caliber in-house staff, and a well-trained network of more than 40,000 field experts sets a new standard for accurate, up-to-date, and well documented valuation data and assessments. The Company's customers include the largest U.S. banks, investment firms, and other financial organizations. Clear Capital's home price data can be accessed on the Bloomberg Professional service by typing CLCA <GO>.

The information contained in this report is based on sources that are deemed to be reliable; however no representation or warranty is made as to the accuracy, completeness, or fitness for any particular purpose of any information contained herein. This report is not intended as investment advice, and should not be viewed as any guarantee of value, condition, or other attribute.

Alanna Harter
Marketing Manager

alanna.harter@clearcapital.com
Phone: 530.550.2515

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Alanna Harter
Marketing Manager

alanna.harter@clearcapital.com
Phone: 530.550.2515