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Home prices projected to drop nationally but rise in five areas

Photo of Washington DC skyline and Potomac River by Navin Sarma.

Top performing markets

ClearCapital’s Home Data Index Forecast outlines price declines on a national level and project home prices will fall another 2.4% by the end of 2011.

Despite a national decline, the ten highest performing major metropolitan markets are projected to see performance this year, half of which are projected to see modest gains in home prices.

Clear Capital said, “The Midwest was particularly hard hit in the first half of 2011, with prices in Detroit for example falling nearly 20% ($12,000 dollars on average of a typical $62,500 home).”

Interestingly, the report also notes that the REO saturation rate is at 31.4% compared to 33.1% at the end of the first quarter. “This number, while historically very high, is clearly trending slightly downward with absorption of REO property,” the report said.

Top performers, bottom performers

For the first half of 2011, Clear Capital says the following cities are the top performers (in order):

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  1. Washington, D.C.-Arlington, Va.
  2. New York-Long Island, N.Y.-No. New Jersey, N.J.
  3. Orlando
  4. Dallas-Fort Worth-Arlington, Texas
  5. San Francisco-Oakland-Fremont, Calif.
  6. Boston-Cambridge-Quincy, Mass.
  7. Honolulu
  8. San Diego-Carlsbad-San Marcos, Calif.
  9. Rochester, N.Y.
  10. Memphis, Tenn.

The cities in bold above are the only five projected to see substantial gains in home values, according to Clear Capital.

The lowest performing markets according to the report:

  • Virginia Beach-Norfolk-Newport News, Va.
  • Cleveland-Elyria-Mentor, Ohio
  • Minneapolis-St. Paul-Bloomington, Minn.

“While most individual markets are also projected to post losses for the year, it is clear prices have begun to level off and are not exhibiting as much volatility as we’ve seen since the downturn began,” says Alex Villacorta, director of research and analytics at Clear Capital.

Conflicting data

What immediately caught our eye was that San Diego is listed lower in the list than we have seen in other economic indices like S&P Case Shiller, as most of this year, Washington D.C. and San Diego have been the only two hot (or lukewarm if you will) spot regarding home values, but Clear Capital reports otherwise and doesn’t project San Diego to make any modest gains this year.

Is this report in line with what you are seeing in your city?

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  1. Ruthmarie Hicks

    July 13, 2011 at 10:18 am

    I think so much depends on how they slice the pie. I believe Case- Shiller was looking at New York as a whole – which did not look good, but Core Logic – like Clear Capital – looked at the lower tri-state region. Where I sit – about 20 miles north of Manhattan I see parts of the market roaring ahead (the most desirable areas) and other parts treading water. In communities up county and in neighboring counties where the commute to Manhattan is over an hour or even 2 hours…the areas remain depressed. There is recovery, but it is very selective and extremely local. It seems to be concentrated in major employment hubs.

    • Thomas Cruse

      July 13, 2011 at 4:23 pm

      It is. Here in San Diego we've seen decreasing prices throughout the first half of 2011, after shooting up marginally in 2010.

      However, the increases/decreases are not homogeneous throughout the county. Home values in the inland San Diego areas, hit harder by foreclosures and defaults, have dropped in value faster than the coastal areas – which have both fewer defaults and fewer people selling.

  2. Jeff Brown

    July 14, 2011 at 1:57 pm

    Also a San Diegan, what's been happening here is what I've expected. I think many local homeowners will be sadly surprised in the near-mid future. San Diego, imho, is, and has been overrated.

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