ClearCapital: Home Prices Continue to Creep Up

Clear Capital, Reno, Nev., said national home prices continued to appreciate modestly into the fall season, despite a pause in monthly rates.

The company’s September Home Data Index Market report said national average home prices continue to creep steadily upward, with quarterly price growth remaining unchanged since last month at 0.8 percent. The national annual price change remains well over 5.0 percent into October, even as the industry’s peak activity season moves further into the rearview.

Regionally, the West continued to lead the nation in quarterly growth performance at 1.2 percent, while the South and Midwest reported 0.9 percent and 0.8 percent, respectively. Growth in the Northeast continues to lag behind the rest of the nation, with prices increasing by just 0.3 percent over the past rolling quarter.

Clear Capital reported Dallas as the fastest appreciating market, boasting a 2.5 percent price increase over the last quarter and by 0.3 percent over the past month. Other southern cities are led growth charts, with Orlando and Tampa each reporting price growth at 2.1 percent and 1.9 percent, respectively. Memphis and Miami both posted 1.5 percent quarterly growth mark.

“National price growth is moderate but encouraging as overall real estate activity begins to dip once again and peak season winds to a close,” said Alex Villacorta, Vice President of Research and Analytics with Clear Capital.

But Villacorta noted several markets, such as Denver, continue to defy all expectations. With a growing tech sector and an increasing popularity among millennials, home prices in the area have skyrocketed well above 11 percent from a year ago. The median price per square foot in the metro area is now well over $120, nearly double the area’s market low of around $65 in 2011. As prices increase, distressed saturation levels in the metro area have fallen to just 5.7 percent, compared to a national average of 13.5 percent.

“A low inventory of REO and short sale properties is a sign of a healthy mortgage industry, but also indicates an overall shortage of homes available on the market in the area, as even less desirable homes with potential condition-related issues are moving increasingly quickly off the market,” Villacorta said.

The report noted distressed homes in Denver tend to stay on the market for just 10 days before entering escrow, moving 4 times faster than the national average of 43 days. The discrepancy is even greater for performing properties, which are currently moving 7 times faster in the metro area than the national average, for which the median days on market is currently less than one week, a sharp contrast to the national average of 42 days.

“Despite the industry’s inevitable slowdown for the fall and winter seasons, some standout markets like Denver continue to push forward with unprecedented levels of price growth,” Villacorta said. “As demand driven by low interest rates continues to rise and inventory, especially that of distressed properties, continues to fall short, a perfect storm of market frenzy is created–leading to incredibly fast turn times for all properties on the market.”

Villacorta added affordability should be a top concern for investors in Denver. “The area’s average home price is currently pushing $400,000–and Denver’s rising home prices may have an expiration date as a potential interest rate increase looms on the year end horizon,” he said.