Clear Capital: Home Price Appreciation of 6% by Yearend
Clear Capital has updated its national forecast and expects home price increases to rise 6% by the end of this year.
As part of the Truckee, Calif.-based firm’s April Home Data Index Market Report, home value growth was estimated to only be 2.6%. But due to higher home price gains across much of the nation, continuous improvements in distressed market measures and greater consumer confidence, a more optimistic projection was made by Clear Capital.
Through June, quarterly, yearly and two quarter forecasts all came in stronger at 1.4%, 8.6% and 1.7%, respectively, relative to months past. Nationally, Clear Capital said home prices continue to benefit from an active spring buying season.
If this year’s forecasts are met, the housing market would outperform historical average gains between 4% and 5%, but indicate moderation from the current yearly gains of 8.6%.
“After more than a full year of recovery, we consider the current momentum and expected moderation a really healthy move toward a more sustained recovery,” said Alex Villacorta, vice president of research and analytics at Clear Capital.
“Increasing gains are great news for homeowners and to be expected at this time of the year, when home buyers are typically most active,” Villacorta continued. “While there is a lot of buzz right now in terms of double-digit housing gains, over the long run, we don’t expect to see the current rates of growth sustained.”
All four regions throughout the country are expected to see total 2013 gains, led by the West at 10.1%, followed by the South at 5.2%, the Midwest at 4.6% and the Northeast with a 4.1% increase.
On a metropolitan level, 45 of the top 50 major markets are projected to experience yearly growth over the final two quarters of 2013. The two quarter forecast for Bakersfield, Calif., shows a 5.2% increase, helping the city claim the top position in the latest report.
REO saturation in Bakersfield is still relatively high at 21.3%, but is on the decline. Also, overall median prices are relatively low at $160,000, which means this is an “attractive market for homebuyers,” Clear Capital said in its report.
Through June, Las Vegas had the greatest yearly gains of 29.3% and is projected to rise another 5% for the remainder of 2013. With this increase, Sin City would lead all metropolitans with total price growth for the year of 19.4%.
Besides Las Vegas, the other five markets that had home value appreciation of at least 20% over the last year as of the end of June was Phoenix (24.7%), Sacramento (23.7%), San Jose (23.6%), San Francisco (23.3%) and Atlanta (22.2%).
Meanwhile, four of the five markets that are not expected to see home price appreciation through the end of this year are only expected by Clear Capital to have declines of less than 0.5%. Cleveland is the only major market that is forecasted to have significant price declines (down 2.2%) through the rest of 2013.
“The metro has yet to see the positive fundamental shift in its distressed sale environment that other markets have seen prior to recovery,” Clear Capital said. “The rate of REO saturation has been on the rise, up nearly seven points over the last three quarters to a current rate of 36.7%. Until this market sees REO saturation subside, it’s unlikely to see prices rise.”