Winter’s Slow Price Growth Points to Stronger Spring Housing Market

As the housing market recedes from the winter season’s stranglehold on home price growth, some factors could point to a strong spring, according to a recent analysis.

Winter continues to slow growth in housing price appreciation nationwide, with home prices falling 0.1% to 0.6% quarter-over-quarter through February 2016, as reported by Clear Capital’s March Home Data Index.

The slow winter real estate season is having a modest effect on nearly all regions across the U.S. Since last month, the Northeast and Midwest have each fallen just 0.2% to a quarter-over-quarter growth of 0.3% through February. Meanwhile, the West dipped 0.1% to a home price growth of 0.9% as it remains the highest regional growth figure in the nation.

The South appeared to be the only region that did not lose ground in the last month, as it held steady at 0.6% quarterly gains through February.

Drilling down to the metropolitan-statistical area (MSA) level, there were some markets that reported quarter-over-quarter growth in home prices since last month—an uncharacteristic upward move during the winter season, Clear Capital notes.

Among these markets, Seattle and Providence, R.I., led the way with 1.6% quarterly price growth; followed by Denver, which reported a 1.4% price increase and Nashville, whose 1.4% growth earned its place among the highest performing major metro markets.

As winter continues to slow quarterly growth across most areas of the nation, there are several MSAs that are showing resistance to the usually “lethargic season,” said Clear Capital’s Vice President of Research Alex Villacorta.

“This is a good sign that the current economic and financial market instabilities are not greatly affecting all corners of the real estate industry, yet shows that there is still volatility in the market across various factors,” Villacorta said in a written statement.

Take Boston for example. The winter season is taking its toll on home price growth in the metro, which is reporting the lowest quarter-over-quarter growth in home prices of any major metro area at -1.9% quarterly price change.

While the bottom performing markets are not dominated by any single region, Clear Capital notes there are no MSAs from the West in this month’s lowest performing markets, aside from Honolulu, which is reporting positive 0.3% quarterly growth—a sign that the region is proving to be more resilient to the “troughs of winter growth.”

When looking at the overall levels of distressed saturation across the nation’s largest housing markets, Clear Capital notes there are signs that this spring is shaping up to be a healthier one than spring of 2015.

For 80% of the top-50 U.S. markets, the percentage of distressed properties on the market is down from March 2015, with Tampa and Orlando showing the best improvements—down 7.8% and 10.4%, respectively. Overall, most markets are down between 1-4%, and only three markets (Baltimore, Hartford and Rochester) have higher distressed saturation levels at an increase of 2% or more.

At the end of the day, the decline in the number of distressed properties from March 2015 to March 2016 is promising, Villacorta said.

“As the legacy of the housing crash continues to subside, markets become healthier and more stable in the long run,” he said.

Lower levels of distressed saturation, however, will mean fewer opportunities for investment buyers, potentially leading to lower demand in certain areas of these markets, he added.

“As the slow season thaws and the spring kickstart of the real estate season nears, we’ll get a better idea of how consumer confidence and economic uncertainty, along with the distressed saturation levels, will ultimately affect the nation’s housing industry,” Villacorta stated.

Written by Jason Oliva

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