Upward trends continue, but most MSAs remain 15% to 40% below peak prices
It’s time to get cozy, toss another log on the fire, and dive into Clear Capital’s December 2015 HDI Market Report, which features current housing data through November.
As the year draws to a close, housing continues to recalibrate and the Midwest maintains its impressive trend. November’s data shows Detroit up 135% from the trough, with other regional MSAs demonstrating strong growth. In January we predicted that the Midwest would be a frontrunner this year for both homeowners and investors, and the region’s small percentage point gains, subsiding losses, and decreased volatility indicate steady improvement that is reflective of the greater recovery.
| National and Regional Markets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Market | Qtr/Qtr% +/- | Yr/Yr | Distressed Saturation |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| National | 0.8% | 5.2% | 15.5% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| West | 1.2% | 7.5% | 10.9% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Northeast | 0.5% | 2.0% | 13.5% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| South | 0.8% | 5.8% | 18.9% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Midwest | 0.9% | 4.6% | 17.8% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chart 1. National and Regional Markets through November 2015. Source: Clear Capital®
“As we approach the end of the year, the state of American housing is as we thought 2015 would play out – a wait-and-see year,” said Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital, a leading provider of intelligent valuation solutions. “The slow moderation of home prices back to historical rates of growth is the most defining attribute of the market over the year. Although housing continues to stabilize, there is still significant variability in individual market performance. For example, some Midwest markets still have a ways to go to return to their pre-bust levels, while other Western markets are seeing all-time highs. Perspective remains key.”
- The peak real estate season has come and gone, and with it national home price appreciation has dropped 0.1 percentage points, from 0.9% to 0.8% over the quarter, as shown in Chart 1 above. The South has followed suit, mirroring the nation’s moderating gains exactly.
- The West rose from 1.0% to 1.2% growth over the quarter, continuing its pattern of outpacing the rest of the nation. We will continue to watch the West closely, asking ourselves if this region – identified by bubble-like behavior – will fall as quickly as it appears to be rising.
- The Northeast also saw an increase in quarterly growth in November, a 0.1% uptick. This is an unexpected shift for a region that, just a few months prior, lagged behind the rest of the country in quarterly growth.
| Highest Performing Major Metro Markets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rank | Metropolitan Statistical Area | Qtr/Qtr% +/- | Yr/Yr | Distressed Saturation |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1 | PROVIDENCE, RI – NEW BEDFORD, MA – FALL RIVER, MA | 3.1% | -0.2% | 13.9% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2 | DETROIT, MI – WARREN, MI – LIVONIA, MI | 2.5% | 11.5% | 15.8% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | CLEVELAND, OH – ELYRIA, OH – MENTOR, OH | 2.2% | 3.4% | 16.6% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4 | SAN JOSE, CA – SUNNYVALE, CA – SANTA CLARA, CA | 1.7% | 10.3% | 4.1% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5 | DENVER, CO – AURORA, CO | 1.6% | 11.9% | 5.8% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6 | MIAMI, FL – FT. LAUDERDALE, FL – MIAMI BEACH, FL | 1.5% | 10.5% | 24.6% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7 | PORTLAND, OR – VANCOUVER, WA – BEAVERTON, OR | 1.5% | 8.8% | 8.9% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8 | ORLANDO, FL | 1.4% | 8.3% | 27.3% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9 | SEATTLE, WA – TACOMA, WA – BELLEVUE, WA | 1.3% | 10.2% | 10.3% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 10 | PHOENIX, AZ – MESA, AZ – SCOTTSDALE, AZ | 1.3% | 8.0% | 11.2% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 11 | SACRAMENTO, CA – ARDEN, CA – ROSEVILLE, CA | 1.3% | 8.1% | 10.7% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12 | ATLANTA, GA – SANDY SPRINGS, GA – MARIETTA, GA | 1.3% | 8.5% | 15.5% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 13 | TAMPA, FL – ST. PETERSBURG, FL – CLEARWATER, FL | 1.3% | 9.5% | 27.2% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 14 | COLUMBUS, OH | 1.2% | 6.5% | 15.7% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 15 | NASHVILLE, TN – DAVIDSON, TN – MURFREESBORO, TN | 1.1% | 7.5% | 9.4% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chart 2. Highest Performing Major Metro Markets through November 2015. Source: Clear Capital®
“Several MSAs reflect an interesting growth phenomenon uncharacteristic for this time of the year,” Villacorta said. “This upward trend is encouraging, but we must remember that gains are as much a function of how low prices have fallen as they are a sign of stabilization and outperformance. Investors and consumers alike could also be pushing upward pressure on demand as they rush to purchase existing inventory at current rates before an anticipated rate hike from the Fed arrives later this month.”
- Providence, R.I. – a mainstay on the list of lowest performing markets until October – has seen a huge increase in growth, jumping from -0.8% quarterly growth in October to 3.1% in November. Gains of this magnitude are more expected during the early spring season, when markets typically gain momentum leading into the peak summer season.
- Cleveland and Detroit have also seen a similar upward pattern during this typically slower season. Quarterly growth in Cleveland has bumped up 0.2% to 2.2% quarterly growth, while Detroit’s quarterly growth has upticked 0.1% from October to 2.5% quarterly growth in November.
- While these increases are notable, bringing Cleveland 52.3% and Detroit a whopping 135.1% above trough, don’t be blindsided by the numbers. Cleveland is still -37.1% below peak while Detroit is -39.3%, demonstrating that both MSAs still have a long road to recovery ahead.
| Lowest Performing Major Metro Markets | ||||||||||
| Rank | Metropolitan Statistical Area | Qtr/Qtr% +/- | Yr/Yr | Distressed Saturation |
||||||
| 1 | BALTIMORE, MD – TOWSON, MD | 0.0% | -1.2% | 24.5% | ||||||
| 2 | VIRGINIA BEACH, VA – NORFOLK, VA – NEWPORT NEWS, VA | 0.2% | 3.1% | 18.2% | ||||||
| 3 | PITTSBURG, PA | 0.2% | 7.8% | 8.9% | ||||||
| 4 | ROCHESTER, NY | 0.3% | 1.7% | 10.0% | ||||||
| 5 | BIRMINGHAM, AL – HOOVER, AL | 0.4% | 4.1% | 15.9% | ||||||
| 6 | PHILADELPHIA, PA – CAMDEN, NJ – WILMINGTON, DE | 0.4% | 2.6% | 16.9% | ||||||
| 7 | MEMPHIS, TN | 0.4% | 2.5% | 26.1% | ||||||
| 8 | RICHMOND, VA | 0.4% | 3.9% | 14.8% | ||||||
| 9 | WASHINGTON, DC – ARLINGTON, VA – ALEXANDRIA, VA | 0.4% | 2.3% | 12.0% | ||||||
| 10 | FRESNO, CA | 0.4% | 6.4% | 13.2% | ||||||
| 11 | BAKERSFIELD, CA | 0.5% | 5.1% | 15.2% | ||||||
| 12 | CHARLOTTE, NC – GASTONGIA, NC – CONCORD, NC | 0.6% | 7.1% | 9.5% | ||||||
| 13 | ST. LOUIS, MO | 0.6% | 5.4% | 16.4% | ||||||
| 14 | NY, NY – NEW JERSEY, NJ – LONG ISLAND, NY | 0.6% | 4.8% | 11.4% | ||||||
| 15 | LOUISVILLE, KY | 0.6% | 4.5% | 13.6% | ||||||
Chart 3. Lowest Performing Major Metro Markets through November 2015. Source: Clear Capital®
“Looking ahead to 2016, affordability remains an issue as price growth seems to be leveling off,” Villacorta said. “Ultimately, the biggest driver for home prices to maintain their positive growth is the overall economic health of the country. In particular, consumers need to see real wage growth and feel more confident in making a long-term commitment to the housing market.
“Until it has the support of other economic inputs like income growth, tapering rental rates, and loosening credit, housing will be challenged in welcoming first-time homebuyers. Throw in a potential interest rate hike and housing could feel the squeeze of demand volatility. This could set us up for a slow start to the 2016 spring buying season. We’ll continue this story next month with our 2015 Year in Review and 2016 Forecast.”
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.
