A recent report by Clear Capital indicates the company expects 2014 to end with housing gains in line with historical rates of growth. According to the report in RISMedia, the company is forecasting growth of just 3.9%.
Figures show that between 1984 and 2013 home prices throughout the country increased by an average of 3.2% every year. Property in the lower price brackets is one of the main drivers of the recovery, but recently growth in this area has begun to slow. It's expected that through to the end of this year the national annual rates of growth will be halved. At the moment the growth rate is 12.4%, but it is expected to decline to just 5.6%. It's anticipated that by the fourth cause of this year, growth across all three price brackets will drop below 1%, and that homes falling into the lower price brackets will register the weakest growth of all.
This might sound gloomy news, but in fact it's certainly not the case. Nationally levels of distressed homes dropped below 20% for the first time since February 2008 which is particularly good news for the long-term stability and health of the real estate market. Even though heavily discounted distressed properties helped kick start the market, continued improvement in consumer confidence and the jobs market is now supporting the recovery.
As to the future, forecasts through to the end of the year show considerable variations, suggesting that moderated opportunity and risk will still persist. It's expected that property in San Jose and Atlanta will continue to recover relatively strongly with 2.9% growth through to the end of the year. Both of these markets are quite different and are driven by different demands. It's not such a rosy picture in Detroit as this is expected to see declines of 4.6% during the next six months to the end of the year, with total growth predicted to be just under 2%. Detroit is continuing to see considerable variation in pricing trends, and the median price is just $115,000.
Clear Capital points out this midyear forecast supports their initial projection at the beginning of the year which was made in December 2013. Although it might come as a shock to some people who have become used to seeing double digit price growth, it does show the market is moving back towards longer-term stability with growth rates matching historical levels. However they will be watching closely to see if the market conforms to these levels or if prices continued to under-perform.