Real estate analysts believe the market recovery will continue in the U.S. throughout the rest of the year, but some argue annual budget bickering at the federal level could threaten progress. Consumer confidence is improving and has been a significant contributor to increased home sales, but that could erode if the government decides to make budget cuts that stifle the ability of buyers to get financing, whether by implementing more banking regulations or by raising interest rates. If things go well, the forecast for positive growth will stretch through the first quarter of 2013. For more on this continue reading the following article from Property Wire.
The recovery in US residential real estate prices should carry on through the winter months but the government’s last minute wrangles over fiscal issues for the annual budget could affect the housing market, it is claimed.
The October housing market report from analysts Clear Capital highlights the toll uncertainty may take on consumer confidence and its threat to the housing recovery.
It points out that fiscal cliff uncertainty threatens to kill housing’s momentum and consumer sentiment is the key to housing market progress.
It also says that national yearly home price growth of 3.6% picked up in September, with additional gains of 2.2% forecasted through winter.
It predicts that Las Vegas is the next Phoenix with yearly home price growth of 8% and 9.5% forecasted over the next six months.
]While housing continued to make progress in September, we’ve turned our focus to the impending fiscal cliff. With forecasted gains of 2.2% over the next six months, the threat of the fiscal cliff could throw a wrench into the recovery,’ said Alex Villacorta, director of research and analytics at Clear Capital.
‘If the cliff is avoided, we still run the risk of damaging confidence with a resolution pushed against year-end deadlines. Confidence is the key to turning the recovery’s near term sprint into a marathon. The sooner businesses and consumers are reassured, the more likely they are to build, purchase, or loan on a house,’ he explained.
He pointed out that the good news is that far more markets are improving than declining even if economic uncertainty keeps some buyers on the sidelines.
In September there was 1.8% quarterly house price growth at the national level, driven in part by gains in the West. The West posted notable quarterly gains of 3.7%, the fifth consecutive month it’s led regional gains. The Midwest and South regions had quarterly home price gains of 1.9% and 1.3%, respectively. The Northeast posted the weakest quarterly gains of 0.2%.
Yearly growth is forecasted to shake off winter’s chill and continue through the first quarter of 2013. National prices closed out the third quarter 3.6% higher than the previous year. If the looming fiscal cliff is averted, the national home price forecast through to the first quarter of 2013 is predicted to be 2.2%.
In annual terms the West continued to dominate with 9.4% in yearly gains, the highest yearly gain the region has recorded since the second quarter in 2006. Forecasted gains of 5.3% over the next six months in the West are projected to drive a sustained recovery at the national level through winter.
The South and Midwest also saw yearly gains of 3.2% and 1.5%, respectively. The South should see further price advances of 1.9% through March 2013 and the Midwest 0.8%. The Northeast continued to see yearly gains soften, with prices rising just 0.9% over the previous year. Home prices in the Northeast are expected to do more of the same and remain relatively flat, growing 0.9% over the next six months.
The top 50 metro markets generally improved over the last quarter, with average price gains of 2.4%. More significant progress was made over the last year, with average growth of 4.7% for the group.
Phoenix held its ground in September as the strongest metro with 27.7% yearly growth. The metro has become a benchmark for recovering markets, with low price points on distressed sales attracting buyers. Over the next two quarters, Phoenix prices are projected to expand another 10.7%.
Meanwhile, Las Vegas is shaping up to be the next Phoenix. Yearly home price gains of 8% should see additional growth of 9.5% over the next six months. Like Phoenix, Las Vegas is seeing gains now concentrated in the discounted price segments.
At the opposite end of the scale Memphis looks more like the next Atlanta. Home prices in Memphis are down 48.3% from the peak, with further declines expected. Over the next six months, Memphis home prices are forecasted to fall another 2.1%.
This article was republished with permission from Property Wire.