Clear Capital, a provider of data and real estate asset valuation, investment, and risk assessment, recently released its Home Data Index™ (HDI) Market Report with data through October 2012. The HDI Market Report uses a broad array of public and proprietary data sources providing the most timely and relevant analysis available.
Report highlights include:
-The Obama Administration must lead phase two of the recovery by collaborating with the industry to reduce regulatory uncertainty.
-Heading into the election, home price gains were steadfast in the face of uncertainty. National, regional and metro gains accelerated in October.
“Now that the election is finally behind us, there should be no more political risk in addressing the housing problem head-on. President Obama’s housing policies must evolve to turn the recovery’s sprint into a marathon,” says Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital.
“Even with the higher than historical annual average returns, lenders are still understandably cautious in the current environment of regulatory uncertainty. And that’s left the middle class out in the cold, enticed by record affordability levels but unable to qualify for a loan. President Obama’s opportunity is now to press policymakers to clear up regulations. Only then will lenders have confidence to fully re-engage in the housing market.
While each candidate ignored the political landmine of housing policy, voters clearly couldn’t. Whether directly or indirectly, it would be hard to find a voter who hadn’t been adversely affected by the housing collapse, and many are still at risk. While prices are up 4.6 percent over the year, they remain 37.6 percent below the peak. Given these losses, a home purchased for $200,000 in 2006 would likely be worth just $124,800 today
After leading the economy into the Great Recession, housing progress is finally considered one of the only bright spots in a slow economic recovery.
Looking ahead, the Obama Administration’s true opportunity (and challenge) is in bringing Wall Street and Main Street together. Lifting the paralyzing veil of uncertainty clouding the credit markets can’t come soon enough. A successful outcome will produce regulatory clarification and collaboration between government agencies and the industry. After signing Dodd-Frank in 2010, key provisions like the Qualified Mortgage (QM) and Qualified Residential Mortgage (QRM) are still up in the air. This regulatory uncertainty exposes the industry to higher risk, putting private investors of mortgages on their heels. As a result, fewer potential buyers get loans. If regulations are clarified in a reasonable way, credit will thaw.
This will support phase two of the housing recovery, as more of the middle class can qualify for home loans.
October Housing Trends: Persistent Gains Stubbornly Refuse to Give Up
Quarterly price gains picked up momentum in October, after a soft September. While current quarterly gains are all under 5.0 percent, October marks the fifth consecutive month of quarter-over-quarter home price growth.
Nationally, prices edged up 2.1 percent over the rolling quarter, a slight uptick over September’s rate of growth. The West came in strong again, with quarterly gains of 3.7 percent. The South posted gains of 2.0 percent over the rolling quarter.
Previously trailing in quarterly gains, the Northeast saw the largest jump in regional performance. Up 1.7 percentage points from September, the Northeast posted 1.9 percent growth quarter-over-quarter. Price gains across the low, mid and top tier sectors all contributed to the region’s quarterly improvement.
Meanwhile, the Midwest was the only region starting to feel winter’s chill. Rolling quarterly growth of 1.0 percent was 0.9 percentage points lower than September’s. Considering the Midwest has typically been the most volatile region, the slight slowdown in growth doesn’t sound alarms. The Midwest tends to see quicker shifts in percentage change due to relatively low price points when compared to other regions. But there are certainly states within the Midwest, like Ohio, that have made notable progress. Ohio’s recorded quarterly gains of 1.6 percent are secondary to its more substantial long-term price growth of 15.0 percent since President Obama took office. Ohio is a great example of how housing was on the President’s side.
Yearly home prices in October came in strong. National gains of 4.6 percent are the highest since August 2010, when the first-time-homebuyer tax credit was enticing buyers.
The West posted its first double digit yearly gains since 2006, at 11.4 percent. While the hard hit region showed little signs of slowing down, it has a long way to go. Current prices are still 42.9 percent below the peak. On par with quarterly trends, the Midwest saw yearly gains soften to 1.1 percent. This, in part, reflects higher prices a year ago when the region saw a short uptick.
October year-over-year home prices in the South and the Northeast made headway; each up at least 1.0 percentage point over September, to 4.2 percent and 2.0 percent, respectively. Virginia, a key swing state in the South, played an important role in President Obama’s win. With yearly growth of 6.8 percent, Virginia outpaced its region by 2.6 points, so it’s no surprise Virginia swung blue.
For more information, and to view the highest and lowest performing major metro markets, visit www.clearcapital.com.