The most recent Clear Capital monthly Home Date Index (HDI) Market Report found that while the national trend in home prices continues to drop, local trends may have a different story to tell about specific regional housing markets. The report looks at the most current data from October 2010 and data at a “granular, sub-zip code” level to compare local markets to the national housing price decline. Markets such as Washington, D.C. (+2.0 percent), New York, NY (+1.6 percent), and Bridgeport, CT (+1.5 percent) show quarterly gains that seem to defy the national trend.
The saying goes that real estate is local and the HDI Market Report seems to prove it true. Nationally, home prices have decreased 5 percent quarter-over-quarter, and dropped 6.8 percent since their mid-August peak. Six of the largest local markets are experiencing a home pricing “double dip” — meaning prices that are dropping below their record lows experienced at the worst of the housing market crash. However, home prices, nationally, still remain 7.7 percent above the 2009 lows.
“Although nationally, price trends are showing significant decreases, it is critical for policy makers, investors, and other users of home price data to understand that price dynamics at local levels differ significantly from the macro trends,” said Dr. Alex Villacorta, Senior Statistician for Clear Capital. “For example, all six major metropolitan areas in California are out-performing both national and West region numbers in terms of yearly gains. Conversely, four of the top markets in Florida are either in or very near double-dip territory, even though national prices remain nearly eight percent above 2009 lows. So, while national home price trends gauge overall home price movement, regional, metro and local housing markets will continue to respond differently to distressed inventories and national policy.”
Washington, D.C. is a perfect example of why it is so important to understand local pricing. For the past three years, D.C. has closely followed the national home pricing trend, matching the price troughs in early 2008 and 2009. Recently though, D.C. is posting a two percent quarterly increase and a 6.7 percent yearly price increase, making it seem that the D.C. area is bouncing back strongly. However, 26 percent of the census tracts – groups of around 1,500 homes – experienced yearly price declines.
“The greater Washington, D.C. market might be doing better than the rest of the country because of its proximity of the federal government, and the solid job base for companies doing business for the government,” said Ben Puchalski, a real estate sales agent from Washington, D.C. “The tax credit definitely eliminated some of the inventory problems in D.C., but we’ve seen a slow down since it ended.”
Along with D.C., New York also experienced quarterly and yearly price gains. Other high performing markets include Honolulu, San Jose, Los Angeles, San Diego, Sacramento, and San Francisco, maintaining yearly price gains by solid margins. On the contrary, local markets like New Orleans, Columbus, Dayton, and Atlanta are experiencing quarterly declines more than double the national rate.
Though the housing market is on the decline on a national level, many micro markets, such as D.C. are showing strong yearly increases. The variability in each of these markets illustrates the important need to gain insight into local housing prices for policy makers, real estate professionals, and other users of home price data. To download the full November 2010 HDI Market Report, see here.
Written by Kelly Mellott