Home Price Expectations Vastly Different from Coast to Coast


Capital Economics expects home prices to increase about 5 percent over the year at a national level. However, housing markets across the nation are markedly different, and this 5 percent will not be a constant in all regions.

At the two far ends of the spectrum, the Northeast and the West will experience far different market climates this year, according to Capital Economics.

The Northeast is much more likely to see no price growth at all than anything close to the 5 percent national average this year, the analytics firm stated in a recent outlook.

A potential for an increase in supply is one factor that may keep prices at bay this year.

Northeastern states have relatively long foreclosure timelines, and their foreclosure rate as of the third quarter of last year was 5.6 percent. This compares to just 2.7 percent in the West.

Capital Economics, therefore, anticipates price increases in the region would lead to increased supply as both lenders and homeowners unload properties onto the market. “Ironically, these factors will conspire to keep price gains muted in the coming years,” the firm stated.

On the other side of the country, the West has already dealt with much of its foreclosure inventory, and the region is well-positioned for potential economic growth and rising incomes.

While housing starts increased 30 percent in the region last year, this growth was not necessarily reflected in the region’s total sales. New home sales made up 15 percent of home sales for the year – making the new construction increase “unlikely to offset the lack of supply in the existing homes market,” according to Capital Economics.

While the Northeast is likely to experience no price gain this year, the West may experience nearly 10 percent, according to the firm.

DSNews.com1/31/2013 – Krista Franks Brock