Home price appreciation continues, but should level off

Prices for single-family homes continue to rise in the Charlotte metro area, according to data just released in CoreLogic‘s December Home Price Index and in Clear Capital‘s latest Home Data Index, which includes January sales.

But both reports say that price increases are also continuing to cool, in Charlotte and nationally.

CoreLogic, based in Greater Los Angeles, says that for the month of December, prices of existing homes in the region, not including distressed sales, rose a healthy 8.0 percent year-over-year. When including distressed sales, short sales and bank-owned homes, prices increased 5.8 percent for the same period.

Month-over-month, the report showed a 0.2 percent rise in prices from November to December when including distressed sales and a 0.5 percent rise without distressed sales.

Clear Capital, based in Truckee, Calif., says that year-over-year sales in the Charlotte market rose by 10.6 percent, and 0.7 percent in quarter-over-quarter sales.

Both CoreLogic and Clear Capital measure home price changes by tracking sales prices in the same single-family homes prices over time. CoreLogic reports annual and monthly price shifts while Clear Capital focuses on annual and rolling-quarter data, comparing the most recent three months with the previous three.

Nationwide, the December CoreLogic report marked the 22^nd consecutive month of year-over-year sales price increases, with single-family home prices increasing 11 percent from their December 2012 level. On a monthly basis, sales prices rose a modest 0.1 percent compared to November when including distressed sales.

Looking ahead, CoreLogic projects a sustained increase in home prices with national prices in January expected to show a 10.2 percent increase from January 2013. However, the report expects prices to dip 0.8 percent in January from December. CoreLogic’s Pending Home Price Index is based on Multiple Listing Service data measuring price changes for the most recent month.

“Last year, home prices rose 11 percent, the highest rate of annual increase since 2005, and 10 states and the District of Columbia reached new all-time peaks,” said Mark Fleming, chief economist at CoreLogic. “We expect the rising prices to attract more sellers, unlocking the pent-up supply, which will have a moderating effect on prices in 2014.”

Anand Nallathambi, president and CEO of the data analytics company, added: “After six years of fits and starts, we can now see a clearer path to a durable recovery in single-family residential housing across most of the United States.”

North Carolina’s home price gains in December were more modest than Charlotte’s, showing a 4.4 percent year-over-year rise including distressed sales and a 5.9 percent increase without REO’s or short sales.

Other highlights from the December report:

• The states with the greatest home price appreciation when including distressed properties were Nevada at 23.9 percent, California at 19.7 percent, Michigan at 14.0 percent, Oregon at 13.7 percent and Georgia at 12.8 percent.
• Three states showed depreciation in home prices: Arkansas’ prices fell 1.5 percent, New Mexico saw prices decrease 1.3 percent and Mississippi home prices fell 0.2 percent.
• When excluding distressed sales, though, no states experienced home price depreciation.
• National home prices are still 18 percent below their peak values reached in April 2006 when including distressed sales, and 13.6 percent lower without distressed sales data.

Clear Capital, which bases its report on sales prices reported by local government recorders and assessors, also says that price gains will likely moderate across the nation and in Charlotte in 2014. The Home Data Index report predicts annual gains of 3 percent to 5 percent nationally.

“Prices have normalized post-bubble and future rates of growth will look more like historical rates of growth,” the report concludes. “At our current quarterly rate of national growth (1.2 percent), peak prices won’t be reached until the year 2021, a healthy move overall. Nationally we don’t see evidence of a price bubble forming again.”

Clear Capital spokeswoman Alana Harter said Charlotte’s cooler price increases are in sync with national trends.

“The slight moderation we’re seeing in Charlotte, we’re also seeing across the country, a trend we expect to continue throughout 2014,” Harter said.

Home prices across the country rose 10.8 percent in Clear Capital’s year-over-year analysis and 1.2 percent quarter over quarter.

The West led in the quarterly gains at 2.1 percent, the Midwest came in at 1.4 percent, the Northeast at 0.9 percent and the Southeast trailing at 0.5 percent.

On the metro-market level, Clear Capital says that Phoenix and Las Vegas, which have each seen recent annual price increases of more than 30 percent due in part to “exploding demand” for low-priced and distressed-sales homes, “are showing signs of overheating” despite a slowdown in price gains.

All of the top-five performing markets in the quarter-over-quarter analysis are in California, with Riverside at 2.8 percent; Los Angeles, Sacramento and San Diego at 2.6 percent; and Fresno at 2.5 percent. Three other California markets are in the top 10: Bakersfield and Oxnard at 2.4 percent, and San Francisco at 2.3 percent. Other markets in the top 10 are Dallas and Detroit, both at 2.4 percent.

“With the majority of metro markets still so far below peak prices, it’s time for conversations surrounding price trends to shift away from the 2006 peak as the point of reference, and back to current trends and forecasts,” said Alex Villacorta, vice president of research and analytics at Clear Capital. “While there are certainly investors and homeowners holding real estate assets that will be underwater for seven years or more, the current housing market is positioned to behave very similar or even below historical norms, given the current economic climate.”