CoreLogic: 2013 marks year of rapid transition
Over three million residential property owners regained lost equity
This past year marked a transitional period in housing as the market moved through quickly escalating prices to a sustainable, long-term recovery, comprised of reduced delinquencies and foreclosure starts as well as rising home values.
According to a recent CoreLogic December quarterly MarketPulse report, with home prices rising as much as they did in 2013, more than three million residential property owners regained lost equity.
Homeowners have profited off of rising home prices, giving them more options in the housing market and enhancing their employment mobility.
But despite the fact that more than two-thirds of mortgaged homes in the U.S. have at least 20% equity, there are still 6.4 million U.S. residences in negative equity—a third of which are in Nevada, Florida, Arizona, Ohio and Georgia.
"We’re encouraged by the improvements of the past year and have every reason to be cautiously optimistic about continued progress in 2014. That said, monitoring the current and potential headwinds the industry faces is critical to your success," said Anand Nallathambi, president and CEO of CoreLogic.
The CoreLogic Home Price Index found that home prices rose strongly on a year-over-year basis every month in 2013, improving from the trough that happened in March 2011.
The analytics firm conducted its research by analyzing 21 geographically diverse metropolitan markets.
Over the past six months, low-end home price growth decelerated in six out of 21 markets, while high-end prices only slowed down in four markets.
"Low-end prices can serve as a forward-looking barometer for overall real estate prices, which is magnified when looking at metropolitan markets," the firm said. "While the numerical difference is not large, the intensity of the deceleration in low-end markets is very large relative to high-end markets."
For example, in September 2013, Boston’s low-end prices were up 4.2% from the prior year, significantly down from a 17% year-over-year growth rate in March.
This is compared to a high-end market like Phoenix, which experienced the largest deceleration, with high-end price growth slowing from 16.2% in March to 14.6% in September.
But not all low-end price segments are declining.
Areas like Chicago and Raleigh, N.C., witnessed the largest acceleration in home prices over the last six months.
Chicago reported that low-end prices remained flat, but by September, they were up 9.8% from last year.
"That acceleration is consistent with our prior analysis, which showed that Chicago has had the most rapid growth of any market for owner-occupied purchase transactions in the past two years," the report said.
Matt Farrell, president of the Chicago Association of Realtors, said he estimates more sellers will be willing to enter the market that have been waiting for the 'all clear' sign in Chicago.
"What I think we will see is that huge reduction of inventory start to flatten as people learn that the market has regained some strength and things have turned around," Farrell added.
Median home value will continue to increase into 2014 but not at the same velocity, Farrell explained. "We see the consumer confidence has been bolstered with decent news on the job market and economic growth, strengthening housing market overall in Chicago."