Non-seasonally adjusted national home prices in the US remained mostly flat over the winter, up 0.7%, with 5 metro markets show periodical declines, according to the latest home data index from Clear Capital.
The report says that low prices homes, those selling for $95,000 and less, have fueled the recovery over the last 2 years and this deeply discounted sector attracted enough buyers to drive prices up 31.8% from the bottom of the market in 2011.
Over the last quarter, however, low tier home price gains slowed to just 1.2%, a big difference from 3.7% a year ago. But the firm says that stabilization, with rates of growth not seen since November 2011, could motivate 1st time and move up home buyers to re-engage.
The report explains that following the peak of the market in 2006, home prices were outpaced by the owners’ equal of rent for 21 out of 23 quarters through 2011.
This environment created attractive investment returns and helped drive investor order at the metro and sub-metro levels at a pace more than historical norms. While the recovery took hold, home price gains outpaced growth in the owners’ equivalent of rent in most of 2012 and 2013,’ it says.
As prices continue to moderate in 2014 toward more historical rates of growth, investors will need to dive down into granular data and analysis to find markets where attractive home prices and rental rates still offer competitive investments,’ it adds.
According to vice president of research and analytic, Alex Villacorta, it is a relief prices remain steady through the last weeks of winter but national periodical gains of just 0.7% mean there’s surely still risk for short term price decline in some markets.
Analyzing rental rates and home price trends at the national level suggest the current investor pool may start to wane as the rate of home price growth outpaces the rate of owners’ equal of rent. Don't expect investors to exit all at once. He said.
The key to overall market development and constancy in 2014 will lie in the transition from investor to customary home buyer demand. While each segment will continue to be main, healthy markets have shown higher rates of traditional home buyer demand and less investor driven demand. Should prices remain stable, home buyer self-assurance will build, supporting a balanced change,’ he added
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