Recovery in US housing market set to slow in 2013

There was a sustained housing recovery and the largest year on year gains seen in nearly two and a half years in the US in 2012, according to a new analysis report from Clear Capital. Its Home Data Index is forecasting continued, yet modest, gains for 2013 and predicting changes in those hard hit, resilient markets like Phoenix, Miami, and Las Vegas.

‘Overall the housing recovery still shows evidence of pushing ahead. National yearly price gains of 4.9% are strong,’ said Alex Villacorta, director of research and analytics at Clear Capital. ‘2013 should be interesting for the housing market, where national gains should continue to see upward growth but likely at a more modest rate. Keeping in mind our current gains are off market lows at the start of the year, 2013 gains will be measured against a higher price floor after a full year of recovery,’ he pointed out.

‘On a local level, we expect to see shifts in the status quo for some hot markets, like Phoenix, as some buyer segments get priced out of recovering markets. As those buyers search for opportunities, markets with improving local economies and low price points, like Minneapolis, could become the new targets. At the end of the day, there are still plenty of great deals to be had across the country, investors looking for decent return, and pent up homebuyer demand on the verge of materialising,’ he added.

Quote from PropertyCommunity.com : “The ideal time to purchase a condo in Miami is during the summer months. Many people from all over the world try to escape their cold winters by moving to Miami, as a result real estate prices go high up during this season and the market turns into a seller’s market, bidding wars are not uncommon. The ideal time to buy real estate in Miami is between the months of May and October.”

Nationally, home prices in December rose 0.9% over the rolling quarter, nearly unchanged from November’s quarterly rate of growth of 1%. Mild quarterly gains likely reflect some pause from buyers who tend to put purchase plans off over the holiday and winter season. The Midwest and the South, each with quarterly gains of 0.6%, saw December trends soften slightly over November. When compared to the heat of the summer, it’s clear the momentum from the Midwest and the South has stalled, where in July quarterly prices gained 2.1% and 1.5%, respectively.

The Northeast experienced gains of 0.3% over the rolling quarter, nearly unchanged over the prior month’s rate of growth. Moderate price changes are not out of character for the region, where quarterly price gains surpassed 1% one time in 2012, and 0.5% only twice over the course of the year. The West was the only region to see a slight uptick in quarterly price gains, with 2.1% growth. As reported throughout the year, the West has been the front-runner of the recovery. December home price trends offer further confirmation of the strongest regional rebound happening in the Western region.

National year on year price gains picked up steam in December, coming in at 4.9%. December yearly gains, as measured against the market lows at the start of 2012, will likely be a high watermark for the near term recovery. ‘Through 2013, national home prices are forecasted to grow by 2.1%. The more than 50% reduction is expected partly because of a higher starting price base, now a full year into the recovery. At the regional level, there are no surprises in year on year growth. The West leads while the Northeast continues to struggle,’ said Villacorta.

The West experienced a continuation of impressive year on year growth, up to 11.8% in December although a forecast of just 2.8% for 2013 points to a moderating recovery for the West, as buyers adjust to a higher priced market. The last time the South saw gains at year’s end was in 2006. So the region’s year end gains of 4% marks an overall great year for the South with 2% price gains forecast through 2013.

This time last year, the Midwest saw prices fall by 3% but December prices rose 3% year on year. The Midwest’s recovery is forecasted to unfold into 2013, with expected yearly gains of 2.3%. As expected, the Northeast saw the lowest rate of yearly growth among all four regions at 1.5%. Yearly price gains only broke out above 2% once over the year and more of the same is forecasted in 2013, with yearly gains expected to hit only 1.4%.