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While most markets across the nation remain relatively unchanged, a longer term dip in distressed saturation levels in the West indicates a strong recovery at the expense of overall affordability, according to Clear Capital’s® August 2016 Home Data Index (HDI) Market report.

Regionally, the South and West are continuing to dominate our list of the nation’s Highest Performing Major Metro Markets, with only one of the top 15 markets located outside of these two powerhouse regions. Western markets are experiencing overall quarterly growth around the 1.4 percent mark, with several individual markets outperforming this average by almost half a percent. Southern markets are also experiencing overall growth that outpaces the national average of 0.7 percent quarter-over-quarter growth. Growth in the midwest has seen a small bump in performance over the last month, increasing 0.2 percent to 0.5 percent quarterly growth, while price increases are nearly non-existent in the Northeast, with quarterly growth upticking to from 0.0 percent to 0.1 percent.

Most performing markets appear to be holding steady since last month’s reporting, with the exception of Honolulu, Hawaii, where growth has sharply increased from 1.2 percent in July to 1.6 percent in August. Tampa, Fla. remains the fastest growing major metro area in the country, with quarterly growth remaining high at 2.5 percent and annual growth at just under 14 percent.

While the West has been consistent in its outperformance of the rest of the nation for several years, the underlying composition of sales that are driving the soaring price growth has not matched this consistency. In the region’s top performing major metro markets, levels of distressed properties have steadily decreased much faster than that of the national average. While the national level of distressed properties is currently at 14.5 percent, cities like Seattle, San Diego, Honolulu, and Las Vegas are now below the 10 percent mark. In San Jose, distressed properties make up only 3.0 percent of overall sales in the market.

“Quarterly growth in most performing markets across the nation appears to be stabilizing, with few major shakeups month to month,” says Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital. “One longer term trend we’ve been keeping our eye on has been the relatively rapid decrease in the distressed saturation levels in top performing western markets. Because distressed saturation levels are one of the key indicators of a market’s overall health, low frequencies of these sales in the market could be a sign of a healthy market. However, as REO and short sale properties become harder and harder to come by in the region, this could be a signal that affordability is continuing to plummet. This, coupled with an observed rapid increase in price and a potential uptick in interest rates in the near future, may spell trouble for the region in the coming months and years as low tier investors and first time homebuyers are continually shut out of major western markets.”

For more information, visit www.clearcapital.com.