Despite projections that national home prices will increase slightly in 2012, Clear Capital said figures are still going to be near levels not seen in over a decade.
The Truckee, Calif.-based real estate analytic provider forecasted a .02% gain in home prices this year due to price stabilization in the second half of 2011 and a decline in REO saturation rates.
In 2011, home prices experienced a year-over-year decline of 2.1%, the smallest year-end change since the market was up 1.7% in 2006. Most of the downturn occurred through May, with prices increasing during the summer buying season and leveling off through the fall and early winter.
However, only 40% of individual markets (20 of 50) looked at in the firm's home data index report, are forecasted to be stable this year.
“Overall, 2011 was a relatively quiet year for U.S. home prices compared to the last five years,” said Alex Villacorta, director of research and analytics at Clear Capital, Truckee, Calif. “However, individual markets reacting to their local economic drivers exhibit a wide range of performance levels.”
Florida markets are predicted to lead the recovery this year, led by Orlando with an expected home price increase of 11.7%. Miami is projected for an 8.8% uptick, followed by Tampa and Jacksonville at 7.4% and 4.3%, respectively. Nearly 52% of all transactions in these markets are cash, much higher than other metropolitan areas, Clear Capital said.
“In places like Florida, which have historically been hard hit, we are now seeing considerable activity in lower-end properties as demand continues to heat up,” Villacorta added.
Bakersfield, Calif. is also projected to see a volatile price increase of 11.1%, while Atlanta and Los Angeles are the two biggest cities expected for home prices to decline substantially at 14.4% and 10.3%, respectively.
Clear Capital is expecting home prices in 2012 to follow the patterns of 2011, which saw the Northeast lead the nation with a meager 0.1% yearly gain, followed by declines of 1.3% in the South, 3% in the Midwest and 4.4% in the West.
Four MSAs reported double-digit price declines in 2011, with Atlanta at the top of this list at 18.3%, then Seattle, Wash. at 15.1%, Birmingham, Ala. was down 11.1% and Detroit had a 10.8% decrease. Each of these markets saw an increase in the percentage of REO sales through the year.
There was good news for some MSAs, as Dayton, Ohio saw an 11.5% annual price growth in 2011. Orlando and Miami also experienced price gains of 6.7% and 5.6%, respectively. All of these markets had lower REO saturation rates to support their increases for 2011.
“Although the national numbers suggest markets are flat, when looking at individual metro markets it turns out only 24% of them showed signs of stabilization in 2011, while the others are still moving more dramatically higher or lower,” Villacorta said. “What's most interesting is that the lower segments of appreciating markets are driving much of the current price growth.”
