Clear Capital, a provider of data and solutions for real estate asset valuation and collateral risk assessment, released its Home Data Index Market Report with data through March, 2014. The report noted that the frosty winter left home prices mostly flat, while saturation of distressed homes remained stable at 21.8 percent.
Year-over-year, home prices increased by 9.8 percent nationally; quarter-over-quarter, the increase was 0.7 percent.
The report noted that the Midwest is still experiencing nonexistent growth over the quarter, causing concerns in the region.
"Our data through the end of March reveals prices remained steady through the final weeks of winter, a sigh of relief to all market participants," said Dr. Alex Villacorta, VP of research and analytics at Clear Capital. "Yet, national quarterly gains of just 0.7 percent mean there's certainly still risk for short-term price declines in some markets."
Low-tier home sales, which are classified as homes selling for $95,000 and less, have fueled recovery for the past two years, according to Clear Capital. The report found, "This deeply discounted sector attracted enough buyers to drive prices up 31.8 percent from the bottom of the market in 2011. Over the last quarter, however, low tier home price gains slowed to just 1.2 percent—a big difference from 3.7 percent a year ago."
Clear Capital hypothesizes the increasingly stable market could motivate first-time and "move-up" home buyers to purchase homes.
Home prices were outpaced by the owner's equivalent of rent for 21 out of 23 quarters. This environment was particularly friendly to investors, who saw attractive returns that helped drive investor demand past historical norms.
According to the report, "While the recovery took hold, home price gains outpaced growth in the owners' equivalent of rent in most of 2012 and 2013."
Villacorta believes a few shifts are essential in order to maintain market stability.
"The key to overall market progress and stability in 2014 will lie in the transition from investor to traditional home buyer demand," he said.
Villacorta added, "While each segment will continue to be important, healthy markets have shown higher rates of traditional home buyer demand and less investor-driven demand. Should prices remain stable, home buyer confidence will build, supporting a balanced transition."
The highest performing major metro markets quarter-over-quarter for March were all in California: Riverside (where prices increased 2.5 percent); Fresno (+2.1 percent); San Diego (+2.1 percent); Sacramento (+2.1 percent); and Los Angeles (+2.1 percent).
The lowest performing major metro markets quarter-over-quarter for March include: New Orleans, Louisiana (-2.6 percent); Dayton, Ohio (-2.4 percent); Jacksonville, Florida (-0.2 percent); Milwaukee, Wisconsin (-0.1 percent); and Baltimore, Maryland (-0.1 percent).