TRUCKEE, CA—Home prices have been increasing nationwide, but the Midwest has lagged behind the West, the nation's top performing region. But this could change in the coming year, according to a new forecast from Clear Capital, a Truckee, CA-based data provider. Company officials say that gains among low tier homes will lead the way as the region begins to outpace the rest of the nation, which should see declining gains overall.
The company today released its Home Data Index™ Market Report with data through December 2014. December data shows the low-tier segment, homes selling under $95,000, hanging on to double digit gains of 10.4% nationally. “But as we head into 2015, this may be the last we see of this magnitude of growth,” the company says. In fact, the low tier segment should grow at around 3%. However, the low tier in the Midwest could see growth of 7%, more than 5 percentage points ahead of the West at 1.7%.
This will help the Midwest pull ahead in 2015. The company expects price growth in the Midwest will be 2.8%, versus 1.2% in the nation overall. Many of the metro areas projected to see the highest price growth next year are in the Midwest. For example, predicted price growth in Columbus, Dayton, Cleveland and Cincinnati will range from 2.2% to 4.5% in 2015. Dayton was one of the 2014's best performers, with gains in median home prices of 16.5%. This is a remarkable change from the previous year, when prices decreased by 2.3%.
Still, Clear Capital adds that double-digit gains may be a thing of the past. For example, even though the West outshined the other three regions with 8.7% growth in 2014, in the previous year its growth hit 18.9%. The Midwest came in second with 7.7% price growth in 2014, down from 10.1% a year ago. The South and Northeast had 6.0% and 2.9% price growth, respectively, in 2014. The nation as a whole saw home prices grow 6.4% by the end of 2014, down from 10.9% a year ago. Furthermore, quarter over quarter gains declined throughout 2014, ending 2014 at 0.9%.
“Overall 2014 was a good year with prices up virtually across the board, though the rate of price growth has declined consistently since the year began,” says Dr. Alex Villacorte, vice president of research and analytics at Clear Capital. “As we turn the calendar, we expect this trend to continue. Nearly all markets have experienced significant turbulence over the last decade and are only now showing signs of stabilization. This stabilization is likely to persist through the first half of the year until the market's recovery strength can again be measured going into the traditional buying season.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
