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June Home Prices Provide Further Evidence of Budding Recovery

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Clear Capital®, a premium provider of data and real estate asset valuation, investment and risk assessment, has released its Home Data Index™ (HDI) Market Report with data through June 2012. The HDI Market Report uses a broad array of public and proprietary data sources providing the most timely and relevant analysis available. Methodology details are on page seven of this report.

Report highlights include:

  • June saw further support for a housing price recovery in sustained momentum with broad-based advances.
  • The nation’s home prices rebounded with quarterly and yearly gains of 1.7 percent.
  • Regional performance improved across the board.
  • The West led the regions in price recovery and forecasted growth, offering insight to the next chapter of recovery.
  • The Midwest gained ground over the rolling quarter, recovering from the persistent price declines over the last year.
  • Home price forecast through 2012 shows continued growth for the nation, regions, and a majority of the top MSAs.

“June home price trends provided further evidence that housing has turned the corner, with the momentum of the recovery picking up speed,” says Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. “Prices continue to climb at the national level, with each of the four regions showing improvements over last month. The West continued as the front runner in terms of overall market correction, with growth branching out from the low tier to mid and higher priced homes. Seeing price growth expand to other sub-markets is a key step in the evolution of this recovery. Even the Midwest started to catch up to the other regions, shedding the drag of recent declines.

“Looking forward over the rest of 2012, we expect to see national, regional, and most metro markets improve by varying degrees. And while it’s encouraging to see broad based advancements coupled with positive forecasts, we remain cautiously optimistic. The current strength in housing fundamentals remains vulnerable to domestic and global economic challenges,” Villacorta adds. “But right now the market is the strongest it’s been since the start of the downturn, and barring a major economic meltdown, we expect to see this organic growth sustain and strengthen through the end of the year.”

Year-over-Year Prices: Improving and Expected to Grow Through 2012

National home prices appreciated by 1.7 percent over the previous year, picking up notable momentum over last month’s marginal gains of 0.1 percent. The progress is expected to extend over the second half of 2012, with additional growth of 2.5 percent forecasted through the end of the year. The current and future expected growth at the national level is a direct result of broad-based regional gains increasing in momentum, coupled with progress expanding across sectors, as seen in the West.

Falling in line with short term trends, the West made the largest contribution to national gains over the last year, posting annual price advances of 4.1 percent. The superior performance, fueled by expanded gains across price tiers, is expected to continue through 2012 with an additional 5.75 percent growth over the next two quarters.

Meanwhile, Northeast home prices tacked on 2.3 percent over the last year. This region, having experienced moderate yearly growth over the last nine months is also expected to see additional gains of 1.8% through the end of 2012.

The South saw prices inflate 1.5 percent over the last year, an improvement over the annual growth of 0.9 percent shown in last month’s Market Report. The accelerating trend is expected to continue, with the South forecasted to see home prices notch up another 1.9 percent by year’s end.

Certainly the Midwest made improvements in long term price trends, but just missed turning a gain with year-over-year losses of 0.6 percent. Although the region continued to see prices slide, the losses tapered significantly over the previous month’s declines of 3.1 percent. And the correction should continue, with projected gains for the Midwest of 1.1 percent for the last half of 2012. While the shift in long term trends for the Midwest has yet to create tailwinds for the national performance, the previous drag associated with continued losses has been alleviated.

MSA Market Analysis and Forecast: Far More Metros Advancing than Declining

The top 50 metro markets generally made positive headway in June. The large majority of markets saw quarterly gains, while only seven markets saw prices slide. Of those markets that posted quarterly losses, only four saw declines greater than 1.0 percent. And while this recovery will continue to take place market by market, the relatively moderate losses among this group are encouraging.

The remaining 43 MSAs turned out growth over the last quarter, with average gains of 3.0 percent doubling the rate of average declines. Additionally, 10 of the 43 advancing markets saw quarter-over-quarter price growth exceed 5.0 percent, providing evidence the recovery is also picking up steam on a metro market level.

Columbus, OH, posted double-digit gains of 13.0 percent, but it’s worth noting that gains alone don’t tell the whole story behind this market’s trends. Volatility for Columbus, OH is typical; having seen 14 quarterly price swings greater than 5.0 percent since the start of the downturn in 2006. Also worth considering is the relatively low median price-per-square-foot of $69, as compared to the national median price-per-square-foot of $105. Given the low price point, seemingly small shifts in price trends can have larger effects on percentage changes. While the growth for Columbus, OH is notable, chances are these trends won’t be lasting.

Phoenix, on the other hand, has been a market showing consistent signs of strength for the past 10 months. With current quarterly growth of 8.7% and annual gains of 20.4 percent, the positive trends in this market are supported on a more sustainable basis.

For more information, visit www.clearcapital.com.

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