The low end of the housing market is positioned to take the lead in price growth in 2015, according to the latest forecast from Clear Capital. While other housing market segments are expected to see gains decline, homes selling for less than $95,000 are predicted to grow at around 3 percent. The low tier in the Midwest is expected to show particular strength, possibly seeing growth up to 7 percent, the report said.
Overall, the Midwest is expected to outperform the rest of the country by 1.6 percentage points in 2015. While the West was outpacing the rest of the country at the end of 2014, its growth rate of 8.7 percent was a decline of more than 10 percentage points compared to where it stood as 2013 drew to a close. The Midwest was a close second with 7.7 percent price growth at the end of last year, and it registered a much smaller decline of just 2.3 percentage points from its previous year level. The South closed out 2014 at 6.0 percent price growth, while the Northeast finished at 2.9 percent, with both logging a slow-down from the previous year.
The metro areas anticipated to see the strongest growth are also in the Midwest, with Ohio claiming many of the top spots. While Milwaukee took the lead with a forecast of 4.9 percent price growth, Columbus came in at No. 2 with Dayton and Cleveland also in the top 10, each expecting growth rates between 2.5 and 4.5 percent.
“The Midwest began rallying in 2014, and was neck and neck with the West in the most recent quarter at 1.1 percent and 1.0 percent respectively,” the report stated. “The forecasted 2015 performance will come as no surprise to those with their eyes on market-level performance in the region.”
Nationally, 2014 saw home price growth end at 6.4 percent, dropping from 10.9 percent the year before. As for 2015, Clear Capital anticipates it will be marked by a progression toward normal growth rates. The report states that double-digit gains for all regions are likely a thing of the past and that price gains nationwide will moderate to between 1 and 3 percent.
On the bright side, such moderation in prices, combined with lowered down payment requirements and improving job numbers, could help boost consumer confidence from traditional homebuyers and benefit hard-hit markets. PB