Data through June confirms projections that 2015 would be a “non-growth” year for housing, according to Clear Capital’s recently released Home Data Index™ (HDI) Market Report reporting on data through June 2015.
Using a broad array of public and proprietary data sources, the HDI Market Report publishes granular home data and analysis. . “With a first full look of the spring buying season and six-month update to the forecast, our data through June confirms our initial projection that 2015 would be a non-growth year,” says Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital. “In January 2015, we forecasted total 2015 national growth would come in at 1.3 percent, more than five percentage points from where we ended 2014 at 6.7 percent national growth. Here we are six months later, and there is very little evidence to change our view that the year will end up with price growth coming in just around the rate of inflation. Our adjusted forecast calls for year-end national growth of 2.6 percent, falling within our initial projected range of between 1 percent to 3 percent.”
While San Francisco’s and San Jose’s year-end growth rates are projected to remain positive, at 3.4 percent and 3.2 percent, growth for both regions through the second half of 2015 is forecasted to fall into negative territory, at -0.2 percent and -0.4 percent. This is especially concerning after the summer buying season and two years of consecutive, yet unsustainable, gains.
At the regional level, growth across all regions remains flat. The Midwest saw an increase in quarterly growth, from 0.1 percent to 0.3 percent, and in terms of price growth, the West continues to be strongest at 1 percent quarterly growth. Along with this flattening across all four regions, distressed saturation fell, as is seasonally expected during the busy buying seasons.
The West is projected to end 2015 at an underwhelming 3.3 percent growth rate, reducing the disparity between East and West. While growth in the East is forecasted to stagnate through the remainder of 2015 at 0.1 percent, it is projected to end the year at a modest 1 percent. Growth rates for the two regions are forecasted to be even more similar a year from now. According to Clear Capital’s one-year forecast, the East is forecasted to virtually standstill at 0.1 percent growth year-over-year, while the West is projected to fall below, bottoming out at an estimated 0 percent year-over-year.
Nationally, it’s more of the same. Data through June looks similar to data through May 2015, with no change in quarterly growth at 0.6 percent and a slight drop of 0.1 percent in yearly growth, from 5.3 percent to 5.2 percent. If you believe the spring and summer seasons reflect the peak of the housing demand cycle, 0.6 percent quarterly growth is a foreboding sign of how the remainder of 2015 may play out.
“In our June report, we went on record with concern of bubble markets across the U.S. Now San Jose is starting to go the way of San Francisco, at peak levels and now leveling off,” says Villacorta. “Both San Francisco and San Jose have been red hot markets, supported in large part by strong job growth. The latest numbers reveal, however, that both markets have reached their apex in the most recent upward price swing and are projected to take a slight dip into negative territory through the second half of 2015, by -0.2 percent and -0.4 percent. While both markets are projected to have total 2015 yearly growth rates of around 3 percent, entering winter 2015-2016 on the down side is of great concern. What started as ‘red hot’ at the start of 2014 may end as ‘in the red’ come 2016.”
For more information, visit www.clearcapital.com.