Us market recovery "far from a sure thing"
Photo credit: Michael Patrick
The US property market's overall recovery is "far from a sure thing", warns new research.
The latest report from CoreLogic shows that quarterly price growth softened in April for the sixth month in a row.
National home prices through April 2015 climbed 5.1 per cent year-over-year, while the quarterly rate of growth continued to moderate at 0.5 per cent.
"Suggestions that the market continues to recover at the clip we saw in 2012-2013 [are] misleading," cautions the report.
Within the top performing markets for April, eight are Western markets. While the West’s market-by-market performance may exceed the other regions, gains have been softening since the beginning of 2014 — hence softening gains at the national level.
Three Florida markets that rank among the top performers boast high levels of distressed saturation. All three markets have distressed saturation rates that are at least 10 percentage points higher than the national level, at 16.5 per cent, suggesting growth is dependent on a higher propensity of distressed inventory in this area.
In this recovery, though, the stigma once associated with REOs (poor condition, buyer beware) has turned around. Today, REOs and short sales signal opportunity to investors and traditional homebuyers alike, and an indication that market-level gains could be ahead.
The figures follow data from the National Association of Realtors, which found that pending sales jumped in April 2015 for the third month in a row.
"Sales may be up, but subsiding gains imply the recovery is at a critical inflection point," says Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital. "As the market normalizes — a good thing for housing overall — small losses could have greater impact, forcing a standstill or even worse, a return to negative territory in certain areas across the country.
"Confidence is down in April, suggesting consumers aren’t quite convinced that the economy, much less housing, is as rosy as some early spring metrics suggest," she adds.
"While single-digit and percentage point gains can rally consumers, the overall health and recovery of the market is far from a sure thing," notes the report.