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West coast sacrifices home affordability for a strong recovery

Top 15 performing major metro markets

The South and West, to no surprise, dominate the country in terms of highest performing housing markets. However, the data making the West one of the top regions is starting to change, according to the latest report from Clear Capital.

Overall, most markets in the nation remain relatively unchanged, the report found.

But after a little digging into the data in the West, the analytics firm found a trend starting to appear in distressed saturation levels in the region.

“While the West has been consistent in its outperformance of the rest of the nation for several years, the underlying composition of sales that are driving the soaring price growth has not matched this consistency. In the region’s top performing major metro markets, levels of distressed properties have steadily decreased much faster than that of the national average,” the report states.

The national level of distressed properties is currently at 14.5%, where are cities like Seattle, San Diego, Honolulu, and Las Vegas are now below the 10% mark. And in San Jose, distressed properties make up only 3% of overall sales in the market.

“Because distressed saturation levels are one of the key indicators of a market’s overall health, low frequencies of these sales in the market could be a sign of a healthy market. However, as REO and short sale properties become harder and harder to come by in the region, this could be a signal that affordability is continuing to plummet. This, coupled with an observed rapid increase in price and a potential uptick in interest rates in the near future, may spell trouble for the region in the coming months and years as low tier investors and first time homebuyers are continually shut out of major western markets,” continued Villacorta.

Here’s the list of the top 15 highest performing major metro markets:

Click to enlarge


(Source: Clear Capital)

The future doesn’t look much brighter for California though. The latest report from the California Association of Relators found that the percentage of homebuyers who could afford to purchase a median-priced, existing single-family home in California in second-quarter 2016 sat at 31%. 

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