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Year on year property price growth in the United States fell from 9% to 8.4% in July, raising concerns about the market’s ability to maintain long term growth.

The data from the latest Clear Capital index also shows that distressed sales fell to 18%, a stark reduction since its peak of 40.8% in March of 2011.

The key issues facing the market include whether home price gains continue to fall past the historical range of 3% to 5% as discounted deals dry up or whether they stabilize to sustain moderate long term growth, according to the report.

Clear Capital's forecast through 2015 shows national home prices will rise just 1.5%, indicating prices may not have the strength to stabilize within this historical range of growth.

While the West of the country continues to dominate regional gains with eight of the top 15 major metro markets, the MSAs within the region are not immune to the strong moderating patterns unfolding across the country, the data shows.

The report points out that each market has its own unique demand drivers, yet similarities exist. Some Western markets like Phoenix and Riverside are seeing a strong pull back from their investor fueled recovery, while others, like San Jose and Seattle, are experiencing moderation alongside strong local economic foundations.

The West is projected to see price declines of 0.8% through 2015, while the historically volatile Midwest could be home to the recovery's next group of heroes, with leading forecasted growth of 3.4%.

Missing from July's Top 15 list is Phoenix which has suffered from the effects of waning investor demand. In July, Phoenix yearly price growth softened to 10.4%, while distressed saturation fell to 13.5%. This is a significant reversal from more than 60% distressed saturation in March 2011, and a cumulative recovery of 62.3% home price appreciation.

The report says that following these notable gains, Phoenix is nearly in line with 2004 price levels, off by just 5%, suggesting Phoenix is where it needs to be. But there are doubts about whether it can stay there through 2015. Forecasts show Phoenix should see 2.6% through 2015, a sobering, yet realistic, rate of stable growth for the market.

Even the current recovery leader, Riverside, is going down the price path of Phoenix. Over the past two years, prices in the MSA have appreciated by a total of 53.2%, while distressed saturation has fallen from 68% to just 15.5%. Riverside's quarterly and annual growth led the top 50 metro markets in July at 2.1% and 18.3%, respectively.

Despite these seemingly strong growth trends, yearly growth in Riverside has fallen 6.6% points from 25% at the start of 2014, and quarterly growth has been cut by more than half over the same timeframe. Forecasts through 2015 show expected losses for the metro of 1.1%, indicating Riverside could see continued moderation turn to losses in the near future.

‘The force of moderation in July trends raises questions around the market's ability to sustain gains through 2015. Relatively speaking, a national yearly growth rate of 8.4% is not alarming, but it's the path by which we got there that is of concern,’ said Alex Villacorta, vice president of research and analytics at Clear Capital.

‘Today's annual rate is over three percentage points lower than it was at the start of the year, and recall that the summer is supposed to be the highlight of the housing cycle. At the metro level, we are taking notice of stronger drops, like in Riverside and Phoenix. Forecasts through 2015 indicate that there are several markets that are not going to be immune to declines, and with a national forecast of just 1.5% price growth over the next 18 months, there will not be much cushion for any sort of hiccup in the broader economy,’ he explained.

‘We expect growth rates to vary more significantly across markets over the next year as local drivers such as confidence and job opportunities ebb and flow. This will be a very unique time for the market as the level of investor activity gives way to the traditional home buying segment. Whether this segment is willing and able to make a commitment on a home purchase remains to be seen, but we know from history that if it were to happen this year, it would have happened by now,’ he continued.

‘With many markets moving past the driving forces and fallout of the bubble, we'll see increasing numbers of metros across the country take their own path, with future declines and unsettled price dynamics all part of the new normal landscape,’ he concluded.

This article was republished with permission from Property Wire.