Clear Capital: Lower Distressed Housing Saturation Points to Stronger Spring
Clear Capital, Reno, Nev., said home price appreciation continued fall quarter over quarter, but pointed to lower distressed saturation levels as a harbinger of a stronger spring home market.
The company’s Home Data Index Market Report said the national quarter over quarter home price growth rate slowed by 0.1 percent to 0.6 percent in February. Three of the four regions reported slower home price appreciation, with only the largest region, the South, holding steady at 0.6 percent quarterly growth. The West fell by 0.1 percent to 0.9 percent quarterly growth, while the Northeast and Midwest both fell by 0.2 percent to 0.3 percent quarterly growth.
At the metro level, Clear Capital noted several markets reported increased quarterly growth, with Nashville, Tenn., up by 0.3 percent to 1.3 percent quarterly growth. Seattle and Providence, R.I., also reported strong quarterly growth, rising by 0.2 percent each. On the flip side, Boston saw the sharpest drop, -1.9 percent for the quarter.
Despite the slowdown, Clear Capital Vice President of Research and Analytics Alex Villacorta said signs point to a healthier spring housing season, noting that for 80 percent of the nation’s top 50 markets, the percentage of distressed properties on the market is down from a year ago. He noted that with Tampa and Orlando show the strongest improvement, down by 7.8 percent and 10.4 percent, respectively, and most markets are down between 1-4 percent. He said only three markets–Baltimore, Hartford and Rochester, N.Y.–have higher distressed saturation levels at an increase of 2.0 percent or more.
“As winter continues to slow quarterly growth across most areas of the nation, there are several MSAs that are showing resistance to the usually lethargic season. This is a good sign that the current economic and financial market instabilities are not greatly affecting all corners of the real estate industry, yet shows that there is still volatility in the market across various factors,” Villacorta said. “At the end of the day, however, the decline in the number of distressed properties from March 2015 to March 2016 is promising. As the legacy of the housing crash continues to subside, markets become healthier and more stable in the long run.”
Villacorta noted conversely, lower levels of distressed saturation could also mean fewer opportunities for investment buyers, potentially leading to lower demand in certain areas of these markets. “As the slow season thaws and the spring kick-start of the real estate season nears, we’ll get a better idea of how consumer confidence and economic uncertainty, along with the distressed saturation levels, will ultimately affect the nation’s housing industry,” he said.
