Although, most markets will see a deceleration in home sales at regional and broad-based national levels, Clear Capital believes that the lower tier of the housing market, that being homes selling for less than $95,000, will grow by about 3 percent in terms of value. In December 2014, low tier homes enjoyed a growth of 10.4 percent in value, though that may obviously decrease in 2015, according to Clear Capital’s forecasts.
The firm’s data shows that low tier growth in the Midwest is forecasted at 7 percent, making it the healthiest region in terms of low-end price growth. Regardless of tier, Midwest price growth is expected to be at 1.6 percent, outpacing the rest of the United States and doubling the national forecast.
A further look at Clear Capital’s data shows that Ohio has the most metropolitan markets on top of the price growth charts, with the Columbus, Cincinnati, Cleveland, and Dayton metros all showing forecasted growth of 2.2 to 4.5 percent in 2015. In 2014, Dayton’s median home prices were up 16.5 percent year-over-year; that is a significant departure from the 2.3 percent price decrease recorded in 2013. Likewise, median sales prices in Cincinnati were up by 9.1 percent in December, and by 17.2 percent for the whole of 2013, both compared to the previous year.
Regardless of where in the United States home prices may be appreciating, Clear Capital predicts an end to double-digit gains, which were good for existing homeowners trying to build or rebuild equity, but almost deleterious for so-called “fence-sitters” waiting for mortgage interest rates to go down and home price appreciation to decelerate.
For the whole of 2014, for example, the West had the biggest price growth at 8.7 percent, or less than half its price appreciation of 18.9 percent in 2013. In terms of the broader national market, home price growth was 6.4 percent at the end of 2014, down from the 10.9 percent appreciation recorded the year prior.
For 2015, Clear Capital predicts that home price growth would continue to settle down in 2015. “A year ago, we forecasted the start of a more mature recovery with year-end gains between 3-5% for the nation, and with price appreciation moderation one of the only consistent trends in 2014,” observed Clear Capital vice president of research and analytics Dr. Alexander Villacorta. “In 2015, we will see the natural progression of the housing market regressing to normal rates of growth. Current price trajectories suggest that price growth at the national level will continue to moderate to 1 percent to 3 percent.”
In all, it looks like the more realistic levels in which home prices are increasing is making for improved housing affordability amid the increased demand for rentals and long-term lows for homeownership statistics. Clear Capital also sees the same headwinds plaguing the housing market in 2015, including a lack of wage growth, but even then, improvements in affordability should satiate demand among consumers in the fair market’s key segments.