"Healthy Demand Expected for First-Time and Move-Up Buyers"
This is great news! I read this just the other day, and thought to myself "I really need to share this with ALL of YOU!"
"Fifteen years into the new millennium, we are finally seeing real potential that the market can support full buyer momentum, according to the recently released Home Data Index™ (HDI) Market Report from Clear Capital, with data through January 2015.
According to the data, 2015 has the promise of a transitional year where full buyer momentum in the low and mid tiers reinforces a strong housing recovery. Sustained national price growth in the low-tier segment, once driven by investor activity, is good news for first-time homebuyers. Also encouraging, the number of potential move-up buyers, once locked into underwater mortgages, has been steadily decreasing. The recent rise in home prices continues to bring more homeowners out of negative equity. With more equity to play with, mid-tier homeowners could move-up, creating more opportunity and driving healthy demand in the low and mid tiers of the market.
“We continue to observe the growing price performance gap between the top and bottom segments of the market,” says Dr. Alex Villacorta, vice president of research and analytics at Clear Capital. “The rate of appreciation for top tier homes is stalling, which is a more direct reflection of waning fair market demand. While this is a concerning development, there is a silver lining. The moderating upper tier may give traditional buyers a moment to catch their breath, and entice move-up buyers to enter this segment of the market. The ripple effect of opening up inventory all the way down the price spectrum could provide opportunity and motivation across all segments, including first-time buyers, to enter the marketplace. The hope is that strength in the low and mid tiers help restore confidence in a stable housing market, and traditional homebuyers re-engage. The next phase of the housing recovery is dependent on healthy demand from this segment.”
The top tier gives way, extending more opportunity to traditional buyers. While we are expecting price growth to moderate across all tiers in 2015, the top tier’s quarterly growth rate fell to 0.3 percent in the fourth quarter, where it had been holding steady at around 1 percent through the first three quarters of 2014. Year-over-year, this tier experienced the lowest price growth rate of 3.6 percent among the three national tiers.
At its current pace, continued moderation in the top tier could push quarterly price growth into negative territory in 2015. January data also reveals the low tier holding on to double digit gains year-over-year at 10.2 percent and healthy quarter-over-quarter gains of 1.5 percent. This divide between a healthy low tier and stalling top tier could kick-off a domino effect. Stalling prices in the top-tier of the market could create the perception of a good deal. This instills confidence in mid-tier homeowners, motivating them to move-up to the top tier.
In turn, this opens up more opportunity for low tier homeowners to move-up to the mid-tier. Creating new opportunity in the low tier could entice potential first-time homebuyers to enter the market. This domino effect could be the catalyst for balanced demand across all sectors of the market.
Regionally, the Midwest continues to lead the pack. Year-over-year the Midwest held on to double digit gains in the low tier segment at 13.6 percent, while the top tier fell to 3.3 percent. We also observe this gap between growth in the low and top tiers on a quarterly basis, with the low tier growing at 1.7 percent and relatively flat growth in the top tier at 0.5 percent. The Midwest led the nation in the all tier segment, with quarter-over-quarter growth at 0.9 percent, narrowly edging the West at 0.7 percent. The Midwest is the only region currently seeing price appreciation in the low and mid tiers, growing concurrently above 1 percent. A moderating top tier could incentivize mid-tier homeowners in 2015 to move-up, setting up the Midwest to be the first region to realize full buyer momentum across all segments.
For more information, visit www.clearcapital.com."
Source The Real Estate Blog Spot