Home prices ended the first quarter of 2013 similar to how they started the year: stable and in positive territory.
According to Clear Capital’s home data index market report for March, national prices rose 6.5% from a year ago. Additionally, quarterly home prices remained positive over winter for the first time since 2006, up 0.9%.
Regionally, the West led with yearly gains of 14.5% and made the largest move forward over February’s 13.6% yearly growth. The Midwest, Northeast and South saw home prices rise over the year by 4.2%, 3% and 5.1%, respectively.
“This is very strong evidence of the start to a new leg of the recovery, one that should give further confidence to consumers and lenders alike that the recovery is real,” said Alex Villacorta, director of research and analytics at Clear Capital. “As buyers become more confident the recovery is sustainable, this sentiment should grow to create a positive feedback loop.”
In March, four metros posted quarterly gains above 3%, including Las Vegas, Phoenix, Atlanta and Sacramento, which were all up 3.5%, 3.5%, 3.3% and 3.1%, respectively. These were some of the hardest hit cities during the height of the housing downturn. But even though Las Vegas and Atlanta continue to have REO saturation above 30%, Clear Capital said the recent price growth is a sign that distressed properties are quickly moving through the system.
Moving forward, the Truckee, Calif.-based valuation firm forecasts continued home price gains through 2013. Besides the 0.9% growth that has happened so far this year, Clear Capital projects an additional 1.7% increase over the next nine months.
On a regional basis, the West, Midwest, South and Northeast are projected to see additional gains of 0.7%, 1.9%, 1.8% and 2.1% over the next three quarters.
Clear Capital does not foresee any major metropolitan market experiencing substantial declines over the year, except possibly in Cleveland. Since March 2012, Cleveland has seen home values fall 0.9%. Furthermore, the city’s REO saturation has risen by 6.6 points on a quarterly basis. Due to these circumstances, Clear Capital expects a home price decline of 0.8% through the end of 2013 for Cleveland.
However, major metropolitan markets should continue to see variability in price trends over the next three quarters. For example, Seattle is expected to finish the year strong, with growth of 6.9% over the next 9 months. Also, unlike the 26.8% uptick in home prices last year, Phoenix is projected to cool off over the next three quarters, with values rising by only 4.7%. For the year, total price increases in Phoenix are estimated to be 8.2%.
“All in all, this great news for housing, where prices are sustainably on the rise, demand continues to grow, and the expected supply influx should curtail any bubble-like price trend behavior,” Villacorta said.