Home Prices to Increase Modestly by Year-End: Clear Capital
04/04/2012 By: Carrie Bay
The valuation firm Clear Capital released the results of its home price forecasting models Thursday. The company expects residential property values at the national level to show slight increases over the next three months, ending the year with a growth rate of 1.2 percent.
Diagrams illustrating the trajectory of home prices from 2006 to now and Clear Capital’s projections heading into 2013 depict the valley shape with current prices at the bottom and a subtle upward trend from March through December of 2012.
The strongest of the country’s four regions throughout much of 2011, the Northeast, is expected to see a modest gain of 0.3 percent over the next three months but pick up momentum and grow prices by 1.3 percent to wrap up the year.
The South is expected to perform the strongest in the short term with prices projected to increase 0.5 percent over the next three months, and end the year up 1.6 percent.
Clear Capital’s forecast indicates the Western region could be turning a corner. The three-month numbers show the region gaining 0.2 percent, and pushing that to a positive 1.0 percent by year-end.
The Midwest remains the weakest region of the country in terms of home prices. There, Clear Capital is expecting a drop of 0.6 percent over the next three months, but then movement into positive territory with a 0.7 percent gain by December.
The 50 metropolitan statistical areas (MSAs) tracked by Clear Capital are forecast to show mixed gains and losses, with 30 markets expected to see gains and 20 markets projected to post losses through the end of 2012. Over half of the metros in the company’s study should see prices move less than 2 percent in either direction. No double-digit declines are expected however, Phoenix, Arizona, and Tampa, Florida, are expected to see double-digit gains. Clear Capital sees positive price trends on the horizon for most of the country, despite the fact that currently home prices are continuing to slip. Data through March 2012 shows national home prices fell 0.2 percent in Clear Capital’s rolling quarter-over-quarter analysis.
Diagrams illustrating the trajectory of home prices from 2006 to now and Clear Capital’s projections heading into 2013 depict the valley shape with current prices at the bottom and a subtle upward trend from March through December of 2012.
The strongest of the country’s four regions throughout much of 2011, the Northeast, is expected to see a modest gain of 0.3 percent over the next three months but pick up momentum and grow prices by 1.3 percent to wrap up the year.
The South is expected to perform the strongest in the short term with prices projected to increase 0.5 percent over the next three months, and end the year up 1.6 percent.
Clear Capital’s forecast indicates the Western region could be turning a corner. The three-month numbers show the region gaining 0.2 percent, and pushing that to a positive 1.0 percent by year-end.
The Midwest remains the weakest region of the country in terms of home prices. There, Clear Capital is expecting a drop of 0.6 percent over the next three months, but then movement into positive territory with a 0.7 percent gain by December.
The 50 metropolitan statistical areas (MSAs) tracked by Clear Capital are forecast to show mixed gains and losses, with 30 markets expected to see gains and 20 markets projected to post losses through the end of 2012. Over half of the metros in the company’s study should see prices move less than 2 percent in either direction. No double-digit declines are expected however, Phoenix, Arizona, and Tampa, Florida, are expected to see double-digit gains. Clear Capital sees positive price trends on the horizon for most of the country, despite the fact that currently home prices are continuing to slip. Data through March 2012 shows national home prices fell 0.2 percent in Clear Capital’s rolling quarter-over-quarter analysis.
The West, South, and Northeast posted quarterly gains of less than 1 percent, and the Midwest lost a significant 2.4 percent. The year-over-year numbers showed even weaker performance for the nation and all its regions, indicating short-term appreciation has yet to be enough to turn the long-term tide.
According to Clear Capital’s assessment, the nation lost 1.4 percent in home values from March 2011 through March 2012, which is slightly better than February’s year-over-year decline of 1.9 percent.
REO saturation, which traditionally pushes down prices, continued to climb last month, Clear Capital reported. It was the second month in a row that distressed property sales as a percentage of total sales increased for the nation and all regions. Clear Capital says its findings confirm speculation that finalization of the attorneys general settlement has led servicers to become more aggressive in moving their REO backlog onto the housing market. In March, the national REO rate went up 1.2 points from the previous month’s reading to hit 27 percent, pointing to an acceleration of REO sales. The Midwest contributed the most to the increase, jumping 3.8 points to 34.3 percent, with the other regions all seeing softer increases.
Of particular interest this month, according to Clear Capital, is how the changes in REO saturation are affecting prices. In the past, there has been a consistent inverse relationship between changes in REO saturation and prices, but not in March’s study. Although their REO rates increased, the West, Northeast, and South regions also saw home prices increase. These geographies are exhibiting a pricing resilience to REO saturation that has not been seen in previous analyses, Clear Capital says. The company says it could be explained by improvement in jobs numbers recently, rapidly increasing investor activity in certain regions, and a general increase in consumer confidence.
According to Clear Capital’s assessment, the nation lost 1.4 percent in home values from March 2011 through March 2012, which is slightly better than February’s year-over-year decline of 1.9 percent.
REO saturation, which traditionally pushes down prices, continued to climb last month, Clear Capital reported. It was the second month in a row that distressed property sales as a percentage of total sales increased for the nation and all regions. Clear Capital says its findings confirm speculation that finalization of the attorneys general settlement has led servicers to become more aggressive in moving their REO backlog onto the housing market. In March, the national REO rate went up 1.2 points from the previous month’s reading to hit 27 percent, pointing to an acceleration of REO sales. The Midwest contributed the most to the increase, jumping 3.8 points to 34.3 percent, with the other regions all seeing softer increases.
Of particular interest this month, according to Clear Capital, is how the changes in REO saturation are affecting prices. In the past, there has been a consistent inverse relationship between changes in REO saturation and prices, but not in March’s study. Although their REO rates increased, the West, Northeast, and South regions also saw home prices increase. These geographies are exhibiting a pricing resilience to REO saturation that has not been seen in previous analyses, Clear Capital says. The company says it could be explained by improvement in jobs numbers recently, rapidly increasing investor activity in certain regions, and a general increase in consumer confidence.
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