January 17, 2012 (Jeff Alan)
Year-over-year home prices in the U.S. are expected to continue declining through the first quarter of 2012 before turning around in the spring and summer resulting in a 0.2 percent gain by year’s end, the first since 2006, according to Clear Capital’s Home Data Index (HDI).
Home prices across the country in the current rolling quarter ending in December declined a modest 0.4 percent after increasing by 0.3 percent the previous month. Prices at the end of the year were 2.1 percent lower than they were when the year began, the smallest year-end change, either up or down, in home prices since 2006 when the market gained 1.7 percent.
It was the 15th consecutive month that annual home prices have declined.
Three of the four regions posted year-over-year declines with the West suffering the largest decline (-4.4%), followed by the Midwest (-3.0%), and the South (-1.3%), with the Northeast (0.1%) being the only region to post an increase.
Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital said, “Overall, 2011 was a relatively quiet year for U.S. home prices compared to the last five years. With national prices down a little more than two percent for the year and sitting at their lowest point since 2001, our projections show that the current balance the market has found will continue through 2012.”
Despite the decline in prices in the most recent quarter, about half of the metro areas in the Index posted a quarterly price increase. Dayton, OH, posted the largest price increase of 5.0 percent during the quarter while Atlanta took honors for the worst performing market with a decline of 8.4 percent.
The top five performing markets for the year were Dayton (+11.5%), Orlando (+6.7%), Miami (5.6%), Rochester (+4.7%) and Milwaukee (+4.5%).
The five worst performing markets of the year were Atlanta (-18.3%), Seattle (-15.1%), Birmingham (-11.1%), Detroit (-10.8%) and Tucson (-9.4%).
For 2012, Florida markets are expected to continue their impressive showing by capturing four out of the eight top performing markets. Orlando is forecast to be the top performing market with an anticipated gain of 11.7 percent followed by Bakersfield (+11.1%), Washington D.C. (+9.3%), Phoenix (+8.9%) and Miami (+8.8%).
The five worst performing markets in 2012 are forecast to be Atlanta (-14.4%), Los Angeles (-10.3%), Seattle (-7.5%), Oxnard (-6.7%), and Las Vegas (-6.4%).
Although national home prices saw their smallest movement in five years, individual metro areas can continue to expect volatile price swings, either up or down, depending on local economic conditions. Only 12 of the top 50 metro areas posted relatively stable price swings of plus or minus 2.5 percent in 2011 with that number expected to increase to 20 in 2012. Half of the 50 metro areas are expected to see a price gain by the end of the year.
“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. What’s most interesting is that the lower segments of appreciating markets are driving much of the current price growth. 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,” added Villacorta.
Tags: Clear Capital, housing prices, price declines, REO, saturation rate, consumer demand, metropolitan areas