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Six Month Forecast Calls For An Attitude Adjustment.
Double digit gains are behind us. Move on. 3.9% year-end growth a sign of long-term stability.
TRUCKEE, Calif. – July 1, 2014 – Clear Capital, 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 June 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.
- We have seen this coming since December 2013. Clear Capital’s update to our 2014 forecast confirms national home prices moderating over the next six months—only 0.9% growth forecasted. When all is said and done, we expect to see 2014 year-end housing gains fall in line with historical rates of 3%-5%, with growth of just 3.9%. Between 1984 and 2013, national home prices grew on average 3.2% per year.
- The low price tier, one of the key drivers of the recovery, has put on the breaks. Through the end of 2014, national annual rates of growth will be more than cut in half from the current 12.4% to just 5.6%. By Q4, quarterly growth across all three price tiers is set to fall below 1%, with the low tier forecast showing the weakest quarterly growth of all (Graph1).
- It’s not all gloom and doom. National levels of distressed saturation fell below 20% for the first time since February 2008. This is certainly a good move for the long-term health and stability of the market, though discounted distressed opportunities particularly among investors helped to jump start the recovery. Improvements in distressed market measures mean other economic measures, like consumer confidence and the job market, must continue to improve to support the recovery.
- Where do we go from here? Though metro market trends reflect moderating patterns seen at the national level, June data and forecasts through the end of 2014 reveal notable variations that suggest opportunity and risk will persist through moderation.
- Atlanta and San Jose should each continue a relatively strong recovery, leading the top 50 MSAs with 2.9% growth through the end of 2014. The markets’ drastically different distressed saturation rates, however, signal they have very different demand drivers.
- Detroit, on the other hand, is slated to see declines of 4.6% over the next six months, to end the year with total growth just under 2%. Detroit continues to see large variability in price trends in part influenced by low price points, with a median price of $115,000.
- Contact Brian Opsal for your June 2014 file of the Top 30 MSAs or access our data on the Bloomberg Professional service by typing CLCA <GO>.
“Our mid-year forecast continues to support the initial 2014 projection for national price growth we made back in December 2013, with overall home prices expected to end the year up 3.9%,” said Dr. Alex Villacorta, vice president of research and analytics at Clear Capital. “While it might feel like a shock to market participants and observers who have grown used to double digit price growth, the market’s continued move back toward long-run historical levels and growth rates is something we have expected. What we will be watching for, however, is whether the market settles into this historical sweet spot or whether prices continue to underperform historical norms.
Declining distressed saturation levels are an undeniable sign that we’re transitioning back to pre-bubble norms. As markets fall back toward 3%-5% historical rates of growth, we hope stability will restore consumer confidence and help support this healthy rate of growth in the long-term.
Yet, any hint of declines in prices over the winter could have a negative effect on the spring buying season in 2015. There is real concern that the markets are not quite strong enough to withstand any further shocks. Uncertainty surrounding drivers like household formations, move up buyers on lock down with underwater mortgages, and constraints in the job market could limit the market’s ability to sustain any type of growth moving forward.”
Graph 1: National Home Price Forecasts by Tier. Source Clear Capital
|National and Regional Market|
|Market||Qtr/Qtr % +/-||Yr/Yr||Distressed Saturation||Six Mnth Forecast|
Chart 1: National and Regional Markets – June 2014. Source: Clear Capital
|Highest Performing Major Metro Markets|
|Rank||Metropolitan Statistical Area||Qtr/Qtr % +/-||Yr/Yr||Distressed Saturation||Six Mnth Forecast|
|1||Atlanta, GA – Sandy Springs, GA – Marietta, GA||1.5%||18.7%||22.4%||2.9%|
|2||San Jose, CA – Sunnyvale, CA – Santa Clara, CA||1.6%||15.4%||4.8%||2.9%|
|3||Miami, FL – Ft. Lauderdale, FL – Miami Beach, FL||2.0%||16.4%||27.0%||2.6%|
|5||Dallas, TX – Fort Worth, TX – Arlington, TX||1.0%||8.7%||3.9%||2.3%|
|9||Boston, MA – Cambridge, MA – Quincy, MA||1.6%||11.5%||12.8%||2.0%|
|11||Cincinnati, OH – Middletown, OH||1.5%||7.4%||21.8%||1.8%|
|12||Denver, CO – Aurora, CO||1.2%||10.3%||9.5%||1.7%|
|13||Milwaukee, WI – Waukesha, WI – West Allis, WI||-0.9%||1.7%||22.7%||1.7%|
|14||Minneapolis, MN – St. Paul, MN – Bloomington, WI||1.4%||11.0%||15.6%||1.7%|
|15||Chicago, IL – Naperville, IL – Joliet, IL||1.3%||11.9%||35.1%||1.7%|
|16||Houston, TX – Baytown, TX – Sugar Land, TX||1.3%||11.8%||5.5%||1.7%|
|17||Los Angeles, CA – Long Beach, CA – Santa Ana, CA||1.9%||16.8%||11.6%||1.6%|
|18||Nashville, TN – Davidson, TN – Murfreesboro, TN||1.1%||9.6%||13.4%||1.6%|
|19||Charlotte, NC – Gastonia, NC – Concord, NC||0.5%||6.5%||14.2%||1.5%|
|21||Cleveland, OH – Elyria, OH – Mentor, OH||0.7%||9.1%||22.5%||1.3%|
|23||Portland, OR – Vancouver, WA – Beaverton, OR||1.4%||9.8%||12.9%||1.2%|
|24||Washington, DC – Arlington, VA – Alexandria, VA||0.9%||8.3%||16.4%||1.2%|
|25||St. Louis, MO||0.7%||6.7%||25.0%||1.1%|
|26||Sacramento, CA – Arden, CA – Roseville, CA||1.5%||17.8%||16.8%||1.1%|
|28||Tampa, FL – St. Petersburg, FL – Clearwater, FL||0.9%||9.0%||32.0%||1.0%|
|30||Raleigh, NC – Cary, NC||0.3%||3.7%||9.4%||1.0%|
|32||San Diego, CA – Carlsbad, CA – San Marcos, CA||1.8%||16.4%||12.7%||1.0%|
|33||Hartford, CT – West Hartford, CT – East Hartford, CT||-0.8%||3.2%||18.4%||0.9%|
|34||Oxnard, CA – Thousand Oaks, CA – Ventura, CA||1.3%||16.0%||11.1%||0.9%|
|35||Las Vegas, NV – Paradise, NV||1.4%||15.1%||25.5%||0.5%|
|36||Philadelphia, PA – Camden, NJ – Wilmington, DE||0.4%||4.5%||19.5%||0.5%|
|38||Birmingham, AL – Hoover, AL||0.7%||4.2%||17.8%||0.2%|
|39||Riverside, CA – San Bernardino, CA – Ontario, CA||2.0%||19.3%||16.4%||0.2%|
|40||San Francisco, CA – Oakland, CA – Fremont, CA||1.8%||18.8%||8.9%||0.2%|
|41||New Orleans, LA – Metairie, LA – Kenner, LA||-0.4%||0.6%||16.1%||0.1%|
|43||NY, NY – No. New Jersey, NJ – Long Island, NY||0.7%||6.4%||12.8%||0.0%|
|44||Phoenix, AZ – Mesa, AZ – Scottsdale, AZ||1.1%||12.2%||14.0%||0.0%|
|45||Virginia Beach, VA – Norfolk, VA – Newport News, VA||0.9%||5.7%||20.4%||-0.1%|
|47||Baltimore, MD – Towson, MD||0.1%||2.9%||23.5%||-0.3%|
|48||Seattle, WA – Tacoma, WA – Bellevue, WA||1.4%||12.5%||17.9%||-0.6%|
|49||Providence, RI – New Bedford, MA – Fall River, MA||1.0%||9.7%||18.9%||-1.0%|
|50||Detroit, MI – Warren, MI – Livonia, MI||2.1%||20.2%||29.6%||-4.6%|
Chart 2: 50 Major Metro Markets and Six Month Forecast – June 2014. 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 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.
Vice President, Marketing