Summer real estate activity has boosted quarterly regional growth in the Midwest and South, while a drop in quarterly performance out West fuels speculation of a cooling market.
- Nationally, quarterly growth continues to stay steady, increasing slightly 0.1% since last month, as it rises to a 0.8% price increase over the last quarter. This is the first time since last November that national quarterly growth has broken the 0.7% mark, indicating that the peak real estate summer season is in full swing for the nation as a whole.
- Below the national level, most regions have also experienced a small boost in quarterly performance over the last month, with the Midwest seeing the largest increase in price growth, rising 0.3 percentage points from 0.5% to 0.8% QoQ growth. The South and Northeast quarterly growth figures have also increased, rising to 0.9% and 0.3% quarterly growth respectively. While the West is still outpacing the rest of the nation at a relatively impressive 1.2% QoQ growth rate, this figure has already fallen 0.2% since just last month. This sudden dip in quarterly gains could be a sign that the region’s strong Spring performance is cooling down as Summer comes to a close, a phenomenon likely due to a lack of affordable inventory and incredibly high prices in several major metro markets.
- Southern metro markets continue to dominate our list of Highest Performing Major Metro Markets this month, whereas metros from the Northeast are noticeably missing from the list. The Northeast region has consistently been the slowest growing in the nation in recent quarters, and the data suggests at least two key factors that are affecting the region’s performance. Home to several key luxury markets like New York and Boston, a lack of affordable inventory has long been a concern for the region, serving to drive significant investor doubt into the marketplace. Coupled with this dip in investor confidence, regional data shows a long-term slowing growth trend across all price tiers since late 2013. Low tier quarterly growth continues to outperform both the top and middle tiers, but price change in this lowest 25% of transactions is moving upward at only 0.5% quarterly, a disappointing metric for any other region in the nation. The region’s mid tier – the middle 50% of home sales – is reporting only a 0.3% price increase over the last quarter, while the Northeastern top tier – the highest 25% of transactions – is virtually stagnant, registering only a 0.1% quarterly price increase.
“While quarterly growth across most of the nation continues to rise as the entirety of summer real estate sales data is captured, our most recent data is indicating that the stellar growth in the Western region is actually slowing down. The West in particular has been the subject of growing market uncertainty recently, and the region’s softening gains are definitely something we will be keeping an eye on as the industry’s peak season gets further in the rearview,” states Alex Villacorta, Ph.D., Vice President of Research and Analytics at Clear Capital. “Disappointing growth metrics out of the Northeast are also a potential cause for concern, and a deeper dive with a price tier analysis for the region indicates that all market segments are performing – or rather, not performing – homogeneously. Since all price tiers in the region are performing similarly, there are limited opportunities for both traditional home buyers and real estate investors to focus their energy, which is perpetuating the softening of home prices that we’ve been observing since last summer.”
Graph 1. Northeastern regional price growth performance by price tier. Data through August 2016. Source: Clear Capital®
Graph 2: Price growth in major Northeastern metro markets. Data through August 2016. Source: Clear Capital®
| National and Regional Markets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Market | Qtr/Qtr% +/- | Yr/Yr | Distressed Saturation |
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| National | 0.8% | 5.1% | 13.9% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| West | 1.2% | 8.0% | 9.5% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Northeast | 0.3% | 1.5% | 14.6% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| South | 0.9% | 5.7% | 15.7% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Midwest | 0.8% | 4.3% | 16.4% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chart 1. National and Regional distressed saturation and changes in home prices from last quarter and last year. Data through August 2016. Source: Clear Capital®
| Highest Performing Major Metro Markets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rank | Metropolitan Statistical Area | Qtr/Qtr% +/- | Yr/Yr | Distressed Saturation |
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| 1 | Memphis, TN | 2.2% | 2.0% | 18.2% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2 | Tampa, FL — St. Petersburg, FL — Clearwater, FL | 2.2% | 14.1% | 18.1% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | Dallas, TX — Fort Worth, TX — Arlington, TX | 2.2% | 10.7% | 2.4% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4 | Orlando, FL | 1.9% | 11.7% | 17.1% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5 | Riverside, CA — San Bernardino, CA — Ontario, CA | 1.7% | 7.2% | 11.2% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6 | Sacramento, CA — Arden, CA — Roseville, CA | 1.6% | 9.6% | 8.5% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7 | Miami, FL — Ft. Lauderdale, FL — Miami Beach, FL | 1.6% | 10.3% | 16.8% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8 | Seattle, WA — Tacoma, WA — Bellevue, WA | 1.6% | 11.9% | 6.9% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9 | Cleveland, OH — Elyria, OH — Mentor, OH | 1.6% | 8.6% | 16.2% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 10 | Denver, CO — Aurora, CO | 1.6% | 11.3% | 5.0% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 11 | Las Vegas, NV — Paradise, NV | 1.5% | 9.7% | 14.8% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12 | Portland, OR — Vancouver, WA — Beaverton, OR | 1.5% | 10.2% | 6.7% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 13 | Detroit, MI — Warren, MI — Livonia, MI | 1.4% | 7.6% | 14.9% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 14 | Providence, RI — New Bedford, MA — Fall River, MA | 1.3% | 10.2% | 12.3% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 15 | Jacksonville, FL | 1.3% | 9.4% | 18.5% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chart 2. Highest Performing Major Metro Markets through August 2016. Source: Clear Capital®
| Lowest Performing Major Metro Markets | ||||||||||
| Rank | Metropolitan Statistical Area | Qtr/Qtr% +/- | Yr/Yr | Distressed Saturation |
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| 1 | Houston, TX — Baytown, TX — Sugar Land, TX | -0.1% | 5.5% | 2.0% | ||||||
| 2 | Hartford, CT — West Hartford, CT — East Hartford, CT | 0.1% | 3.9% | 17.3% | ||||||
| 3 | Virginia Beach, VA — Norfolk, VA — Newport News, VA | 0.3% | 2.0% | 15.2% | ||||||
| 4 | Birmingham, AL — Hoover, AL | 0.3% | 0.8% | 13.0% | ||||||
| 5 | Pittsburgh, PA | 0.3% | 1.8% | 8.1% | ||||||
| 6 | New Orleans, LA — Metairie, LA — Kenner, LA | 0.5% | 6.5% | 12.9% | ||||||
| 7 | NY, NY — No. New Jersey, NJ — Long Island, NY | 0.5% | 3.4% | 12.9% | ||||||
| 8 | Baltimore, MD — Towson, MD | 0.5% | 3.3% | 20.1% | ||||||
| 9 | Washington, DC — Arlington, VA — Alexandria, VA | 0.5% | 3.2% | 12.0% | ||||||
| 10 | San Antonio, TX | 0.6% | 2.7% | 1.1% | ||||||
| 11 | San Francisco, CA — Oakland, CA — Fremont, CA | 0.6% | 6.8% | 4.9% | ||||||
| 12 | Philadelphia, PA — Camden, NJ — Wilmington, DE | 0.6% | 2.9% | 15.0% | ||||||
| 13 | Raleigh, NC — Cary, NC | 0.7% | 4.9% | 5.2% | ||||||
| 14 | Louisville, KY | 0.7% | 4.2% | 9.7% | ||||||
| 15 | Bakersfield, CA | 0.7% | 6.0% | 12.5% | ||||||
Chart 3. Lowest Performing Major Metro Markets through August 2016. 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.
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.
