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Spoiler Alert. Clear Capital’s Adjusted 2015 Forecast Numbers Are In. A Cause For Concern?
With the spring buying season behind us, unease grows as gains continue to decline through the summer buying season.
Reno, NV — July 6, 2015
- While San Francisco’s and San Jose’s year-end growth rates are projected to remain positive, at 3.4% and 3.2%, growth for both regions through the second half of 2015 is forecasted to fall into negative territory, at -0.2% and -0.4%. This is especially concerning after the summer buying season and two years of consecutive, yet unsustainable, gains.
- At the regional level, growth across all regions remains flat. The Midwest saw an increase in quarterly growth, from 0.1% to 0.3%, and in terms of price growth, the West continues to be strongest at 1% quarterly growth. Along with this flattening across all four regions, distressed saturation fell, as is seasonally expected during the busy buying seasons.
- The West is projected to end 2015 at an underwhelming 3.3% growth rate, reducing the disparity between East and West. While growth in the East is forecasted to stagnate through the remainder of 2015 at 0.1%, it is projected to end the year at a modest 1%. Growth rates for the two regions are forecasted to be even more similar a year from now. According to Clear Capital’s one-year forecast, the East is forecasted to virtually standstill at 0.1% growth year-over-year, while the West is projected to fall below, bottoming out at an estimated 0% year-over-year.
- Nationally, it’s more of the same. Data through June looks similar to data through May 2015, with no change in quarterly growth at 0.6% and a slight drop of 0.1% in yearly growth, from 5.3% to 5.2%. If you believe the spring and summer seasons reflect the peak of the housing demand cycle, 0.6% quarterly growth is a foreboding sign of how the remainder of 2015 may play out.
- Contact Brian Opsal for your June 2015 file of the Top 30 MSAs or to access our data on the Bloomberg Professional service by typing CLCA <GO>.
“With a first full look of the spring buying season and six-month update to the forecast, our data through June confirms our initial projection that 2015 would be a non-growth year,” says Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital. “In January 2015, we forecasted total 2015 national growth would come in at 1.3%, more than five percentage points from where we ended 2014 at 6.7% national growth. Here we are six months later, and there is very little evidence to change our view that the year will end up with price growth coming in just around the rate of inflation. Our adjusted forecast calls for year-end national growth of 2.6%, falling within our initial projected range of between 1% to 3%.
In our June report, we went on record with concern of bubble markets across the U.S. Now San Jose is starting to go the way of San Francisco, at peak levels and now leveling off. Both San Francisco and San Jose have been red hot markets, supported in large part by strong job growth. The latest numbers reveal, however, that both markets have reached their apex in the most recent upward price swing and are projected to take a slight dip into negative territory through the second half of 2015, by -0.2% and -0.4%. While both markets are projected to have total 2015 yearly growth rates of around 3%, entering winter 2015-2016 on the down side is of great concern. What started as ‘red hot’ at the start of 2014 may end as ‘in the red’ come 2016.”
|National and Regional Markets|
|Market||Qtr/Qtr % +/-||Yr/Yr||Distressed Saturation||Six Month Forecast||2015 Forecast|
Chart 1: National and Regional Markets – June 2015. Source: Clear Capital
|Top 50 Major Metro Markets|
|Rank||Metropolitan Statistical Area||Qtr/Qtr % +/-||Yr/Yr||Distressed Saturation||Six Month Forecast||2015 Forecast|
|2||DENVER, CO – AURORA, CO||1.7%||11.4%||7.4%||3.1%||8.3%|
|3||SEATTLE, WA – TACOMA, WA – BELLEVUE, WA||1.6%||10.4%||13.2%||1.3%||6.2%|
|4||DALLAS-FORT WORTH-ARLINGTON, TX||1.5%||9.8%||3.8%||1.8%||6.6%|
|5||HOUSTON-BAYTOWN-SUGAR LAND, TX||1.5%||11.3%||4.7%||2.5%||6.8%|
|7||TAMPA-ST. PETERSBURG-CLEARWATER, FL||1.4%||7.6%||29.3%||2.1%||6.0%|
|8||MIAMI-FORT LAUDERDALE-MIAMI BEACH, FL||1.4%||9.6%||25.2%||1.0%||5.2%|
|10||LOS ANGELES-LONG BEACH-SANTA ANA, CA||1.3%||8.0%||9.6%||0.4%||4.1%|
|11||RIVERSIDE-SAN BERNARDINO-ONTARIO, CA||1.2%||7.8%||13.6%||0.2%||3.4%|
|12||LAS VEGAS-PARADISE, NV||1.2%||6.2%||19.3%||0.4%||4.1%|
|13||SAN FRANCISCO-OAKLAND-FREMONT, CA||1.2%||8.3%||6.5%||-0.2%||3.4%|
|16||OXNARD, CA – THOUSAND OAKS, CA – VENTURA, CA||1.0%||5.2%||8.9%||1.3%||3.5%|
|17||SAN JOSE-SUNNYVALE-SANTA CLARA, CA||1.0%||7.6%||4.1%||-0.4%||3.2%|
|20||NEW YORK-NORTHERN NEW JERSEY-LONG ISLAND, NY-NJ-PA||1.0%||5.6%||13.7%||-0.8%||2.1%|
|22||ATLANTA-SANDY SPRINGS-MARIETTA, GA||0.9%||8.6%||17.9%||1.8%||4.9%|
|23||DETROIT, MI – WARREN, MI – LIVONIA, MI||0.9%||11.2%||23.1%||-0.5%||2.6%|
|24||SAN DIEGO, CA – CARLSBAD, CA – SAN MARCOS, CA||0.9%||5.9%||9.7%||0.6%||3.3%|
|29||MINNEAPOLIS-ST. PAUL-BLOOMINGTON, MN-WI||0.8%||6.1%||10.9%||-0.5%||2.0%|
|34||ST. LOUIS, MO-IL||0.7%||5.3%||19.8%||1.2%||3.5%|
|37||VIRGINIA BEACH-NORFOLK-NEWPORT NEWS, VA-NC||0.5%||3.4%||20.8%||-0.5%||1.0%|
|40||MILWAUKEE, WI – WAUKESHA, WI – WEST ALLIS, WI||0.4%||6.0%||18.4%||1.3%||2.2%|
|44||NEW ORLEANS-METAIRIE-KENNER, LA||0.2%||5.5%||20.2%||1.0%||2.2%|
|47||HARTFORD-WEST HARTFORD-EAST HARTFORD, CT||-0.4%||-3.7%||23.2%||-0.7%||-1.8%|
|50||PROVIDENCE-NEW BEDFORD-FALL RIVER, RI-MA||-2.1%||-9.9%||18.3%||2.3%||-3.7%|
Chart 2: Top 50 Forecasted Metros – Data through June 2015. 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) 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 is a nationwide provider of real estate valuations, data and analytics, quality assurance services and technology solutions. The Company’s customers include mortgage lenders, servicers, investors, GSEs, and Ratings Agencies. Clear Capital products include appraisals, broker price opinions, property condition inspections, value reconciliations, appraisal review and risk scoring, automated valuation models, and home data indices. The Company’s innovative technology, experienced valuation experts, 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. Morningstar Credit Rating issued Clear Capital its highest Residential Vendor Ranking – MOR RV1. Clear Capital’s home price data can be accessed on the Bloomberg Professional service by typing CLCA <GO>.
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