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Brian Opsal

Vice President, Marketing

brian.opsal@clearcapital.com

Phone: 530.550.2546

Don’t hold your breath. At 3%-5% Annual Growth, Peak Prices May Not Be Seen Until 2021.

But there’s hope. Moderating trends may require a more forward looking perspective.

 

TRUCKEE, Calif. – February 3, 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 January 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.

 

  • National home prices are right in line (within 2%) with inflation adjusted long-run average levels, indicating prices have normalized post-bubble and future rates of growth will look more like historical rates of growth. Home prices have typically gained between 3% and 5% a year. At our current quarterly rate of national growth (1.2%), peak prices won’t be reached until the year 2021, a healthy move for the industry overall.
  • In real terms, inflation adjusted home prices at the metro level show 46 out of 50 metro markets’ home price levels at pre-2003 levels, with 25 out of 50 metros reporting prices below 2000 levels (See Graph 1). Because the majority of markets remain far off peak values, the peak becomes a less relevant point of reference for new investors and homebuyers. Honolulu is the only metro out of the top 50 to see home prices within peak levels, with inflation adjusted home prices resting at levels last seen in 2005. This anomaly has, in part, been driven by very unique supply and demand, a benefit of being a highly desirable tropical island.
  • While prices remain far off peak values, current trends continue to moderate across the country (See National Map). National yearly gains cooled to 10.8%, a trend that should continue over the next several months. Yearly gains at the metro level are moderating as well, with Sacramento now seeing the highest yearly gain at 25.4%, down from a high of 28% in October. Las Vegas has seen substantial pull back in January with yearly gains of just 21.3%, down from 32.4% in October. The market’s relatively quick moderating pattern indicates it reached an unsustainable rate of growth and is now correcting back to more normal historical rates of growth.
  • Contact Brian Opsal for your January 2014 file of the Top 30 MSAs or access our data on the Bloomberg Professional service by typing CLCA <GO>.

 

“With the majority of metro markets still so far below peak prices, it’s time for conversations surrounding price trends to shift away from the 2006 peak as the point of reference, and back to current trends and forecasts,” said Dr. Alex Villacorta, vice president of research and analytics at Clear Capital. “While there are certainly investors and homeowners holding real estate assets that will be underwater for seven years or more, the current housing market is positioned to behave very similar or even below historical norms, given the current economic climate. For new deals and investors without legacy assets, the new housing environment should be framed in terms of more typical, moderate rates of growth with tempered optimism for the ongoing housing recovery.

 

Nationally, we don’t see evidence of a price bubble forming again. Double digit gains over the last year, while similar to rates of growth in the run-up to the bubble, are off a much lower price floor. Phoenix and Las Vegas, however, are showing signs of overheating. These markets skyrocketed off very low price floors as their low-tier and distressed market segments exploded with demand. Each market saw yearly gains top out around 30%, and now are seeing price gains cool substantially. Las Vegas has seen more than a 10 percentage point pull back in just three short months, even though prices remain 20.8% below 2000 levels, after adjusting for inflation. Meanwhile, Phoenix’s yearly gains are down to 19.8%, with prices now 1.9% above 2000 levels after adjusting for inflation. We’ll be watching these markets closely throughout the winter to see how demand holds up.”


Feb2014_Graph

 

Graph 1. Source: Clear Capital®


Feb2014_Map
National Map – January 2014. Source: Clear Capital®

 

 

 Highest Performing Major Metro Markets
Qtr/Qtr Rank Metropolitan Statistical Area Qtr/Qtr % +/- Yr/Yr REO Saturation
1 Riverside, CA – San Bernardino, CA – Ontario, CA 2.8% 23.0% 24.5%
2 Los Angeles, CA – Long Beach, CA – Santa Ana, CA 2.6% 22.4% 17.5%
3 Sacramento, CA – Arden, CA – Roseville, CA 2.6% 25.4% 21.8%
4 San Diego, CA – Carlsbad, CA – San Marcos, CA 2.6% 20.3% 19.1%
5 Fresno, CA 2.5% 18.5% 26.9%
6 Bakersfield, CA 2.4% 19.3% 26.1%
7 Dallas, TX – Fort Worth, TX – Arlington, TX 2.4% 12.5% 5.5%
8 Oxnard, CA – Thousand Oaks, CA – Ventura, CA 2.4% 18.9% 17.9%
9 Detroit, MI – Warren, MI – Livonia, MI 2.4% 24.9% 29.1%
10 San Francisco, CA – Oakland, CA – Fremont, CA 2.3% 25.3% 14.1%
11 New Orleans, LA – Metairie, LA – Kenner, LA 2.2% 6.5% 20.2%
12 St. Louis, MO 2.2% 11.9% 26.4%
13 Miami, FL – Ft. Lauderdale, FL – Miami Beach, FL 2.2% 18.5% 31.3%
14 Phoenix, AZ – Mesa, AZ – Scottsdale, AZ 2.1% 19.8% 19.4%
15 San Jose, CA – Sunnyvale, CA – Santa Clara, CA 2.1% 20.9% 9.5%

 

 

 Lowest Performing Major Metro Markets
Qtr/Qtr Rank Metropolitan Statistical Area Qtr/Qtr % +/- Yr/Yr REO Saturation
1 Pittsburgh, PA 0.3% -5.4% 13.5%
2 Birmingham, AL – Hoover, AL 0.3% 5.6% 19.8%
3 Baltimore, MD – Towson, MD 0.3% 5.1% 22.4%
4 Rochester, NY 0.6% 3.8% 5.8%
5 Cincinnati, OH – Middletown, OH 0.6% 4.3% 28.7%
6 Raleigh, NC – Cary, NC 0.6% 4.2% 12.9%
7 Atlanta, GA – Sandy Springs, GA – Marietta, GA 0.6% 6.2% 24.1%
8 Virginia Beach, VA – Norfolk, VA – Newport News, VA 0.7% 5.7% 22.8%
9 Charlotte, NC – Gastonia, NC – Concord, NC 0.7% 10.6% 17.2%
10 Jacksonville, FL 0.7% 9.7% 41.2%
11 Philadelphia, PA – Camden, NJ – Wilmington, DE 0.8% 5.0% 18.8%
12 Richmond, VA 0.8% 7.8% 22.9%
13 Hartford, CT – West Hartford, CT – East Hartford, CT 0.9% 6.9% 15.3%
14 Louisville, KY 0.9% 5.6% 15.7%
15 Milwaukee, WI – Waukesha, WI – West Allis, WI 0.9% 7.8% 22.9%

 

 

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.

 

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.

 

Brian Opsal

Vice President, Marketing

brian.opsal@clearcapital.com

Phone: 530.550.2546