Outside it may be cold and snowy with early storms, but housing prices are warning up in some of the most stunningly negative Midwestern and Northeastern markets, according to Clear Capital’s November market report.

Regionally the West still leads the appreciation parade, with quarterly increases of 1.2 percent and annualized price growth at 7.5 percent.  But the Northeast and Midwest both gained ground compared to earlier in the year.  The Northeast saw an increase in quarterly growth in November, a 0.1% uptick. This is an unexpected shift for a region that, just a few months prior, lagged behind the rest of the country in quarterly growth.

National and Regional Markets
Market		Qtr/Qtr% +/-		Yr/Yr		Distressed Saturation
National		0.8%		5.2%		15.5%
West		1.2%		7.5%		10.9%
Northeast		0.5%		2.0%		13.5%
South		0.8%		5.8%		18.9%
Midwest		0.9%		4.6%		17.8%

“As the year draws to a close, housing continues to recalibrate and the Midwest maintains its impressive trend. November’s data shows Detroit up 135% from the trough, with other regional MSAs demonstrating strong growth. In January we predicted that the Midwest would be a frontrunner this year for both homeowners and investors, and the region’s small percentage point gains, subsiding losses, and decreased volatility indicate steady improvement that is reflective of the greater recovery,” wrote Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital.

Other market showing new life in the second half of the year are:

• Providence, R.I. – a mainstay on the list of lowest performing markets until October – has seen a huge increase in growth, jumping from -0.8% quarterly growth in October to 3.1% in November. Gains of this magnitude are more expected during the early spring season, when markets typically gain momentum leading into the peak summer season.
• Cleveland and Detroit have also seen a similar upward pattern during this typically slower season. Quarterly growth in Cleveland has bumped up 0.2% to 2.2% quarterly growth, while Detroit’s quarterly growth has upticked 0.1% from October to 2.5% quarterly growth in November.
• While these increases are notable, bringing Cleveland 52.3% and Detroit a whopping 135.1% above trough, don’t be blindsided by the numbers. Cleveland is still -37.1% below peak while Detroit is -39.3%, demonstrating that both MSAs still have a long road to recovery ahead.

 

Highest Performing Major Metro Markets
Rank		Metropolitan Statistical Area		Qtr/Qtr% +/-		Yr/Yr		Distressed Saturation
1		PROVIDENCE, RI – NEW BEDFORD, MA – FALL RIVER, MA		3.1%		-0.2%		13.9%
2		DETROIT, MI – WARREN, MI – LIVONIA, MI		2.5%		11.5%		15.8%
3		CLEVELAND, OH – ELYRIA, OH – MENTOR, OH		2.2%		3.4%		16.6%
4		SAN JOSE, CA – SUNNYVALE, CA – SANTA CLARA, CA		1.7%		10.3%		4.1%
5		DENVER, CO – AURORA, CO		1.6%		11.9%		5.8%
6		MIAMI, FL – FT. LAUDERDALE, FL – MIAMI BEACH, FL		1.5%		10.5%		24.6%
7		PORTLAND, OR – VANCOUVER, WA – BEAVERTON, OR		1.5%		8.8%		8.9%
8		ORLANDO, FL		1.4%		8.3%		27.3%
9		SEATTLE, WA – TACOMA, WA – BELLEVUE, WA		1.3%		10.2%		10.3%
10		PHOENIX, AZ – MESA, AZ – SCOTTSDALE, AZ		1.3%		8.0%		11.2%
11		SACRAMENTO, CA – ARDEN, CA – ROSEVILLE, CA		1.3%		8.1%		10.7%
12		ATLANTA, GA – SANDY SPRINGS, GA – MARIETTA, GA		1.3%		8.5%		15.5%
13		TAMPA, FL – ST. PETERSBURG, FL – CLEARWATER, FL		1.3%		9.5%		27.2%
14		COLUMBUS, OH		1.2%		6.5%		15.7%
15		NASHVILLE, TN – DAVIDSON, TN – MURFREESBORO, TN		1.1%		7.5%		9.4%

“The slow moderation of home prices back to historical rates of growth is the most defining attribute of the market over the year. Although housing continues to stabilize, there is still significant variability in individual market performance. For example, some Midwest markets still have aways to go to return to their pre-bust levels, while other Western markets are seeing all-time highs. Perspective remains key,” Dr. Villacorta said.

National and Regional Markets through November 2015. Source: Clear Capital^®

National and Regional Markets
Market		Qtr/Qtr% +/-		Yr/Yr		Distressed Saturation
National		0.8%		5.2%		15.5%
West		1.2%		7.5%		10.9%
Northeast		0.5%		2.0%		13.5%
South		0.8%		5.8%		18.9%
Midwest		0.9%		4.6%		17.8%

“As we approach the end of the year, the state of American housing is as we thought 2015 would play out – a wait-and-see year,” said Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital, a leading provider of intelligent valuation solutions. “The slow moderation of home prices back to historical rates of growth is the most defining attribute of the market over the year. Although housing continues to stabilize, there is still significant variability in individual market performance. For example, some Midwest markets still have a ways to go to return to their pre-bust levels, while other Western markets are seeing all-time highs. Perspective remains key.”

• The peak real estate season has come and gone, and with it national home price appreciation has dropped 0.1 percentage points, from 0.9% to 0.8% over the quarter, as shown in Chart 1 above. The South has followed suit, mirroring the nation’s moderating gains exactly.
• The West rose from 1.0% to 1.2% growth over the quarter, continuing its pattern of outpacing the rest of the nation. We will continue to watch the West closely, asking ourselves if this region – identified by bubble-like behavior – will fall as quickly as it appears to be rising.
• The Northeast also saw an increase in quarterly growth in November, a 0.1% uptick. This is an unexpected shift for a region that, just a few months prior, lagged behind the rest of the country in quarterly growth.

“Several MSAs reflect an interesting growth phenomenon uncharacteristic for this time of the year,” Villacorta said. “This upward trend is encouraging, but we must remember that gains are as much a function of how low prices have fallen as they are a sign of stabilization and outperformance. Investors and consumers alike could also be pushing upward pressure on demand as they rush to purchase existing inventory at current rates before an anticipated rate hike from the Fed arrives later this month.”

• Providence, R.I. – a mainstay on the list of lowest performing markets until October – has seen a huge increase in growth, jumping from -0.8% quarterly growth in October to 3.1% in November. Gains of this magnitude are more expected during the early spring season, when markets typically gain momentum leading into the peak summer season.
• Cleveland and Detroit have also seen a similar upward pattern during this typically slower season. Quarterly growth in Cleveland has bumped up 0.2% to 2.2% quarterly growth, while Detroit’s quarterly growth has upticked 0.1% from October to 2.5% quarterly growth in November.
• While these increases are notable, bringing Cleveland 52.3% and Detroit a whopping 135.1% above trough, don’t be blindsided by the numbers. Cleveland is still -37.1% below peak while Detroit is -39.3%, demonstrating that both MSAs still have a long road to recovery ahead.

Highest Performing Major Metro Markets through November 2015. Source: Clear Capital^®

Highest Performing Major Metro Markets
Rank		Metropolitan Statistical Area		Qtr/Qtr% +/-		Yr/Yr		Distressed Saturation
1		PROVIDENCE, RI – NEW BEDFORD, MA – FALL RIVER, MA		3.1%		-0.2%		13.9%
2		DETROIT, MI – WARREN, MI – LIVONIA, MI		2.5%		11.5%		15.8%
3		CLEVELAND, OH – ELYRIA, OH – MENTOR, OH		2.2%		3.4%		16.6%
4		SAN JOSE, CA – SUNNYVALE, CA – SANTA CLARA, CA		1.7%		10.3%		4.1%
5		DENVER, CO – AURORA, CO		1.6%		11.9%		5.8%
6		MIAMI, FL – FT. LAUDERDALE, FL – MIAMI BEACH, FL		1.5%		10.5%		24.6%
7		PORTLAND, OR – VANCOUVER, WA – BEAVERTON, OR		1.5%		8.8%		8.9%
8		ORLANDO, FL		1.4%		8.3%		27.3%
9		SEATTLE, WA – TACOMA, WA – BELLEVUE, WA		1.3%		10.2%		10.3%
10		PHOENIX, AZ – MESA, AZ – SCOTTSDALE, AZ		1.3%		8.0%		11.2%
11		SACRAMENTO, CA – ARDEN, CA – ROSEVILLE, CA		1.3%		8.1%		10.7%
12		ATLANTA, GA – SANDY SPRINGS, GA – MARIETTA, GA		1.3%		8.5%		15.5%
13		TAMPA, FL – ST. PETERSBURG, FL – CLEARWATER, FL		1.3%		9.5%		27.2%
14		COLUMBUS, OH		1.2%		6.5%		15.7%
15		NASHVILLE, TN – DAVIDSON, TN – MURFREESBORO, TN		1.1%		7.5%		9.4%

 

Lowest Performing Major Metro Markets through November 2015. Source: Clear Capital^®

Lowest Performing Major Metro Markets
Rank		Metropolitan Statistical Area		Qtr/Qtr% +/-		Yr/Yr		Distressed Saturation
1		BALTIMORE, MD – TOWSON, MD		0.0%		-1.2%		24.5%
2		VIRGINIA BEACH, VA – NORFOLK, VA – NEWPORT NEWS, VA		0.2%		3.1%		18.2%
3		PITTSBURG, PA		0.2%		7.8%		8.9%
4		ROCHESTER, NY		0.3%		1.7%		10.0%
5		BIRMINGHAM, AL – HOOVER, AL		0.4%		4.1%		15.9%
6		PHILADELPHIA, PA – CAMDEN, NJ – WILMINGTON, DE		0.4%		2.6%		16.9%
7		MEMPHIS, TN		0.4%		2.5%		26.1%
8		RICHMOND, VA		0.4%		3.9%		14.8%
9		WASHINGTON, DC – ARLINGTON, VA – ALEXANDRIA, VA		0.4%		2.3%		12.0%
10		FRESNO, CA		0.4%		6.4%		13.2%
11		BAKERSFIELD, CA		0.5%		5.1%		15.2%
12		CHARLOTTE, NC – GASTONGIA, NC – CONCORD, NC		0.6%		7.1%		9.5%
13		ST. LOUIS, MO		0.6%		5.4%		16.4%
14		NY, NY – NEW JERSEY, NJ – LONG ISLAND, NY		0.6%		4.8%		11.4%
15		LOUISVILLE, KY		0.6%		4.5%		13.6%

“Looking ahead to 2016, affordability remains an issue as price growth seems to be leveling off,” Villacorta said. “Ultimately, the biggest driver for home prices to maintain their positive growth is the overall economic health of the country. In particular, consumers need to see real wage growth and feel more confident in making a long-term commitment to the housing market. Until it has the support of other economic inputs like income growth, tapering rental rates, and loosening credit, housing will be challenged in welcoming first-time homebuyers. Throw in a potential interest rate hike and housing could feel the squeeze of demand volatility. This could set us up for a slow start to the 2016 spring buying season.”