Winter is cooling off the housing industry, but the number of homes reaching all-time high prices continues to grow – even as some markets are turning negative.
- National home prices have crept upward at a pace of 0.9% over the last quarter, a rate that’s holding steady since last month. Despite an expected winter slowdown in real estate activity, nationwide annual price growth has actually increased 0.3% since last month to 6.1%, the highest reported year-over-year price growth since February 2015.
- While national quarterly growth rates have remained stable so far this winter, underlying regional quarterly growth patterns have begun to shift in some areas. Home prices in the Midwest have grown at 0.8% over the last rolling quarter, a slight decrease of 0.2% from 1.0% since last month. Conversely, price growth in the Northeast has actually increased by an identical margin, upticking 0.2% to a quarterly average of 0.7%. In the Southern and Western regions of the nation, however, quarterly growth appears to be holding steady at a 1.0% quarter-over-quarter price increase.
- The San Jose, CA metro area is once again reporting negative quarterly price growth this month since initially turning downward in December 2016. After a temporary uptick to a neutral rate of 0.0% quarterly price change in January, prices in the formerly booming housing market of San Jose have fallen 0.3% over the last quarter. This time, the San Jose MSA area isn’t the only market in the nation where quarterly growth is in the red – the Hartford, CT metro area is now also experiencing negative quarterly price growth, where home prices have too fallen by 0.3% since fall.
- Apart from these two negative MSAs, most markets are growing at impressive rates for a mid-winter check-in. Portland, OR is currently the nation’s fastest growing market and has been steadily growing around the 2% QoQ mark since last fall. In total, 8 major metro markets are growing at 1.5% QoQ or higher, compared to only 3 metro areas above this mark this time last year.
- Continued, long-term price growth has pushed several MSAs to all-time price highs, and our Home Data Index now indicates that 16 out of the nation’s top 50 largest metropolitan housing markets have surpassed the peak prices of the housing bubble. Outside of these major markets, dozens of other micro markets are also breaking glass ceilings and selling at all-time high prices. In total, these record-breaking major metro and micro markets account for around a third of the total national housing stock. In those markets that haven’t quite yet reached pre-recession price levels, an additional 5% of the national housing stock is less than 5.8% – the national rate of price growth in 2016 – from surpassing 2006 price levels.
- National price growth is predicted to moderate in 2017 with annual growth projections in the 2-3% range. However, if growth is anywhere close to the levels we saw in 2016, nearly 40% of homeowners nationwide who purchased during the height of the housing bubble could be safely above water by the end of 2017. For homeowners who purchased either before or after the record prices of Spring 2006, the proportions are even larger.
- “Following several rounds of healthy, peak-season summer growth, winter gains thus far this season have remained relatively healthy across much of the country,” states Alex Villacorta, Ph.D., Vice President of Research and Analytics at Clear Capital. “And as prices have continued to climb in the long term during the post-housing crash, the large portion of the housing market that has been frozen in negative equity has shrunk significantly – meaning that an increasingly large portion of previously underwater homeowners may now have the option of entering the market. While the expected spring housing boost is still months away, an influx of fresh new demand on the market could further boost growth potential later this year – as long as there are no other shocks to the market.”
“Following several rounds of healthy, peak-season summer growth, winter gains thus far this season have remained relatively healthy across much of the country,” states Alex Villacorta, Ph.D., Vice President of Research and Analytics at Clear Capital. “And as prices have continued to climb in the long term during the post-housing crash, the large portion of the housing market that has been frozen in negative equity has shrunk significantly – meaning that an increasingly large portion of previously underwater homeowners may now have the option of entering the market. While the expected spring housing boost is still months away, an influx of fresh new demand on the market could further boost growth potential later this year – as long as there are no other shocks to the market.”
Graph 1. National Year-over-Year Price change versus Percent of Housing Stock Above Price Level. Data through January 2017. Source: Clear Capital®
Graph 2. Percent change from Peak Price Level by Region. Data through December 2016. Source: Clear Capital®
|National and Regional Markets|
Chart 1. National and Regional distressed saturation and changes in home prices from last quarter and last year. Data through January 2017. Source: Clear Capital®
|Highest Performing Major Metro Markets|
|Rank||Metropolitan Statistical Area||Qtr/Qtr% +/-||Yr/Yr||Distressed
|1||Portland, OR — Vancouver, WA — Beaverton, OR||1.9%||11.0%||6.1%|
|2||San Antonio, TX||1.8%||8.5%||1.5%|
|3||Tampa, FL — St. Petersburg, FL — Clearwater, FL||1.8%||14.3%||17.8%|
|4||Detroit, MI — Warren, MI — Livonia, MI||1.8%||7.8%||13.7%|
|6||Sacramento, CA — Arden, CA — Roseville, CA||1.5%||9.9%||7.9%|
|7||Seattle, WA — Tacoma, WA — Bellevue, WA||1.5%||11.8%||6.6%|
|8||Miami, FL — Ft. Lauderdale, FL — Miami Beach, FL||1.5%||10.4%||16.0%|
|9||Denver, CO — Aurora, CO||1.4%||10.7%||5.2%|
|10||Riverside, CA — San Bernardino, CA — Ontario, CA||1.4%||8.5%||10.6%|
|11||Nashville, TN — Davidson, TN — Murfreesboro, TN||1.3%||9.7%||6.7%|
|12||Dallas, TX — Fort Worth, TX — Arlington, TX||1.3%||9.4%||2.2%|
|13||Milwaukee, WI — Waukesha, WI — West Allis, WI||1.3%||5.5%||15.2%|
|14||Las Vegas, NV — Paradise, NV||1.3%||9.9%||14.8%|
Chart 2. Highest Performing Major Metro Markets through January 2017 Source: Clear Capital®
|Lowest Performing Major Metro Markets|
|1||San Jose, CA — Sunnyvale, CA — Santa Clara, CA||-0.3%||4.0%||3.3%|
|2||Hartford, CT — West Hartford, CT — East Hartford, CT||-0.3%||2.0%||17.3%|
|4||Virginia Beach, VA — Norfolk, VA — Newport News, VA||0.1%||1.4%||16.4%|
|5||St. Louis, MO||0.3%||4.1%||16.5%|
|6||Birmingham, AL — Hoover, AL||0.4%||1.9%||13.5%|
|7||New Orleans, LA — Metairie, LA — Kenner, LA||0.4%||4.9%||12.0%|
|8||San Francisco, CA — Oakland, CA — Fremont, CA||0.5%||5.4%||5.3%|
|9||Houston, TX — Baytown, TX — Sugar Land, TX||0.6%||5.6%||2.3%|
|11||NY, NY — No. New Jersey, NJ — Long Island, NY||0.7%||3.7%||11.3%|
|13||Atlanta, GA — Sandy Springs, GA — Marietta, GA||0.7%||6.8%||12.7%|
|15||Raleigh, NC — Cary, NC||0.8%||5.4%||4.6%|
Chart 3. Lowest Performing Major Metro Markets through January 2017 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.