Clear Capital: Growing Schism Between Top Tier, Lower Tier Markets

Clear Capital, Reno, Nev., reported “drastically different dynamics” going on at the extremes of nearly all home markets, with lower tier market growth outpacing top tier markets, in some cases by more than 20 percent.  

The company’s Home Data Index Market Report for October showed Metropolitan Statistical Areas with some of the highest distressed saturation rates, such as Detroit, Orlando, and Miami, show low tier year over year growth outpacing that of the top tier by large margins. Clear Capital Vice President of Research and Analytics Alex Villacorta said this dichotomy is most likely due to high levels of investor activity in the low price tiers, which also typically represent the majority of distressed activity.  

“However, the top tiers of these markets appear to be lagging significantly in comparison,” Villacorta said.   The report said the San Jose MSA was knocked off its top spot by Detroit, where quarterly growth rose by 2.4 percent. By contrast, Las Vegas growth fell from by 0.5 percent to 1.5 percent.  

Villacorta attributed the contrast in tier growth most likely due to high levels of investor activity in the low price tiers, which also typically represent the majority of distressed activity. “These kinds of disparities between the low and top tiers are obfuscated when looking at the growth figures for the entire market as a whole, and could lead to missed opportunities for investors who are only looking at the headlining figures, or worse, disappointing returns for those who are investing on higher end properties,” he said.  

For any buyers of high end properties, Villacorta said, “this clear trend signals the need to be highly vigilant with investment strategies in this market segment.”