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Home arrow News arrow Property price growth in US still solid last month but concerns raised about Florida

Property price growth in US still solid last month but concerns raised about Florida

Thursday, 07 February 2013
Residential property prices in the United States remained solid last month with the recovery predicted to continue into 2013 and beyond, according to the latest market report from Clear Capital.

The data from the real estate valuation and analytics firm shows that quarterly price trends in January were mostly flat across the nation and regions but national and regional yearly home prices strengthened with the exception of the Midwest.

However the firm’s report says that major metro markets in Florida missed the top performing list for the first time since September 2011 and issued a word of caution that markets could now be adjusting to the higher prices seen in the last 12 months.

‘Home price trends in January remained solid overall, considering we are in the middle of the toughest time of year for real estate. We saw quarterly trends continue to soften, while yearly gains strengthened, suggesting the budding recovery is not immune to the slower winter season,’ said Alex Villacorta, director of research and analytics at Clear Capital.

‘What remains to be seen is if home prices will continue to rise, or remain stable through the winter. Regardless of what trends play out in the near term, we expect home prices to continue on a positive trajectory long term,’ he explained.

There was some surprise that Florida metros, particularly Miami, Orlando, Tampa, and Jacksonville, were all missing from the top 15 performing market list. Since September 2011, at least one of these markets made the list.
‘While this isn't confirmation that the recovery is finished in the sunshine state, it's certainly something to keep an eye on. These markets led the recovery in late 2011, and share some of the hallmarks for recovering markets overall. But so far, each of these metros remains in positive territory, and it looks like the state is simply experiencing what is par for the course, fewer buyers in the typically slow winter season,’ said Villacorta.

At the national level, home prices in January increased by 0.9% over the rolling quarter, unchanged over December’s rate of growth. While national prices were mostly flat, they are still in positive territory and the firm points out that this time last year the market saw quarterly declines of 1.6%.

Home prices in the West also continued to improve, with growth of 2.1% over the last rolling quarter. Like national trends, the West’s price growth held steady over December’s quarterly rate of growth. The Western region experienced the most significant short term price growth out of all the regions, and 11 out of the 15 top performing metros are in the West.

Very little quarterly price change took place in the South, Northeast, and Midwest. Quarterly home prices in the South rose 0.7%, a slight improvement over the prior month. The Northeast’s small quarterly advancement of 0.6% is noteworthy because it’s double December’s rate of growth.
The Midwest experienced the lowest quarterly growth of all the regions at 0.2% and the report says this was due to a handful of major metros experiencing flat prices. Chicago and Detroit helped put the brakes on the region’s growth overall, it adds that considering the season, these trends don’t raise too much concern.

On an annual basis prices are up 5.4% and the main driving force in markets across the country continued to be the lower priced segment of homes selling for $102,000 and less, of which many are REO sales.

While the national REO saturation rate in January held at 18.4%, well off the peak of 41% in March 2009, REO properties remain attractive to investors and home buyers alike and continue to make an impact on the overall health and recovery of the housing market, the report says.

The West recorded the highest yearly growth of all the regions, at 12.9% and the South saw yearly gains of 4.5% in January. But the firm says that the recovery in the South has a long way to go before total losses of 33.1% are recouped. January home prices in the Northeast rose 2.4% over the last year and although the rate of growth is the lowest out of all the regions, it’s an impressive jump over December’s yearly rate of growth of 1.5%. Yearly price gains of 2.7% in the Midwest retreated slightly when compared to last month’s 3% rate of growth.

As a group, the top 15 major metro markets in January continued to report similar trends to those seen in months past. Each of the top 15 metros reported quarterly gains, all under 5%. On average, the top 15 major metros saw yearly gains of 13.4%, notably higher than 5.4%, the national rate of yearly growth.

Most notably in January, the top 15 major metro list did not include any Florida markets. September 2011 was the last time a Florida metro didn’t make the list. The report says that while it’s too early to speculate a stall in Florida’s recovery, January’s performance could be an indication of more moderate growth for a handful of the metros that led the national recovery in late 2011.

The report concludes that overall, January’s home price trends confirm the housing market continues to hold up well in the midst of the toughest season of the year. ‘Yet, Florida’s metros falling short of the top performing 15 markets for the first time since late 2011 offers caution that there could be shifts in the status quo to come, as buyers adjust to higher priced markets a year into recovery. Even so, solid yearly home price gains offer a cushion for minor setbacks or shifts over the near term,’ it says.

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