The firm said that mild quarterly gains reflect a slight pause from buyers who tend to put purchase plans off over the holiday and winter season and it expects prices to continue growing in 2013 but at a slower rate than in 2012 of around 2.1%.
The Midwest and the South, each with quarterly gains of 0.6%, saw growth soften slightly over November and slower than the July quarterly price gains of 2.1% and 1.5% respectively.
The Northeast saw gains of 0.3% over the rolling quarter, nearly unchanged over the prior month’s rate of growth. The West was the only region to see a slight uptick in quarterly price gains, with 2.1% growth.
As the firm has reported throughout the year, the West has been the front runner in the nation’s real estate recovery. December home price trends offer further confirmation of the strongest regional rebound happening in the Western region.
Overall home prices in 2012 finished the year strong, boosted off the market lows of early 2012. December’s quarterly trends were mostly flat, indicating potential fiscal cliff and winter impact, the firm pointed out.
‘The housing recovery still shows evidence of pushing ahead, as indicated by our December home price trends and 2013 forecasts. Quarterly home prices mostly mirrored those of last month and suggest that some buyers took pause in the initial winter months. Yet, looking back over 2012, national yearly price gains of 4.9% are still strong,’ said Alex Villacorta, director of research and analytics at Clear Capital.
‘The housing landscape, however, could quickly shift should the broader economy tumble back into recessionary territory. Whether by perception or actual decrease in buying power for the average consumer, residual effects of the fiscal cliff deal could cause housing to change course. But as it stands now, home prices have continued to show resiliency by posting their largest yearly gain in nearly two and a half years,’ he explained.
He added that 2013 should be interesting for the housing market, where national gains should continue to see upward growth but likely at a more modest rate. ‘Keeping in mind our current gains are off market lows at the start of the year, 2013 gains will be measured against a higher price floor after a full year of recovery,’ he said.
‘On a local level, we expect to see shifts in the status quo for some hot markets, like Phoenix, as some buyer segments get priced out of recovering markets. As those buyers search for opportunities, markets with improving local economies and low price points, like Minneapolis, could become the new targets. At the end of the day, there are still plenty of great deals to be had across the country, investors looking for decent return, and pent up homebuyer demand on the verge of materialising,’ he added.
The West also experienced a continuation of impressive year on year growth, up 11.8% in December and the firm forecasts a more moderate 2.8% growth for 2013 as buyers adjust to a higher priced market.
The last time the South saw gains at year’s end was in 2006 so the region’s year end gains of 4% marks an overall great year while 2% price gains are forecasted through 2013. This time last year, the Midwest saw prices fall by 3%. Current home prices have notably improved with December prices rising 3% year on year with predicted yearly gains of 2.3% for 2013.
The Northeast saw the lowest rate of yearly growth among all four regions at 1.5%. While it was the first to see minor gains of 0.1% in January 2012, the regional recovery never took hold. Yearly price gains only broke out above 2% once over the year. And more of the same is forecasted in 2013, with yearly gains expected to hit only 1.4%.
Price gains varied in cities. While each market’s home price trends remain dependent on local economic conditions, there are some commonalities. The strongest recoveries have generally unfolded in two types of markets: Hard hit markets like Phoenix, Miami, and Las Vegas, offering investors attractive deals, and markets like Seattle, San Jose, and San Francisco, with relatively strong local economies attracting buyers despite relatively high price points.
‘Generally we expect markets with the strongest recoveries underway to experience moderate growth in 2013, as rising prices bring many markets into alignment with long-run historical norms. Slower growth in markets with robust recoveries underway can be seen as a more mature stage of recovery, rather than a weakness,’ said Villacorta.
Out of the top 50 major metro markets in 2013, Seattle, a market with a strong recovery already underway, is expected to see the highest gains at 13.5%. Unlike other strong performing markets, Seattle is not expected to see a notable moderation of growth. The metro’s relatively strong job market is expected, in part, to continue to drive housing gains overall.
Birmingham is projected to see the second highest rate of growth out of the top 50 metros, at 10.0% in 2013 and out of all top 50 major metros, only eight markets should see prices fall in 2013. Of those eight markets, average declines should come in at just 0.9%.
St. Louis home prices in 2013 are expected to fall 1.7%, the largest of forecasted declines in the top 50 major metros.
‘All told, 2012 ended strong and 2013 is poised for a continued recovery. The national housing market has continued to grow at a healthy pace, and chances of a robust recovery are slim in 2013, in part because we have less ground to make up,’ Villacorta explained.
‘While prices are still off their peaks by 37.6%, they are now more aligned with historical average rates of growth. While a larger economic setback could easily change the course for the worse, current rates of growth signal the market is slowly calibrating itself to pre-bubble rates and prices,’ he added.
