(HDI) Market Report

Clear Capital®: National Quarterly Declines Likely
Over Next Few Months.
February 2014 prices show largest drop in quarterly growth since 2010.
TRUCKEE, Calif. – March 3, 2014 – Clear Capital (www.ClearCapital.com), the premium provider of data
and solutions for real estate asset valuation and collateral risk assessment, today released its Home Data
Index™ (HDI) Market Report with data through February 2014. Using a broad array of public and
proprietary data sources, the HDI Market Report publishes the most granular home data and analysis
earlier than nearly any other index provider in the industry.
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February national home price gains were notably lower over the quarter, down to 1% from 2.5%.
This is the largest drop since 2010, when gains were coming off the first time homebuyer tax
credit. As markets adjust to the new normal, 1% is significant; 2014 is only expected to see 3%5% growth. Graph 1 shows the recent, significant drop in quarterly trends.
Additionally in February, national REO saturation ticked up 1.8 percentage points from 20.9% to
22.7%, the largest gain since January 2012. Declining quarterly gains coupled with rising REO
saturation suggest home prices could see quarterly declines within the next few months. Graph
2 shows how price declines can directly correlate with rising REO saturation over sustained
periods.
With one month of winter to go, moderating prices in the bottom half of the lowest performing
metro markets suggest near-term price declines are not out of the question. In February, three
out of 15 reported slight declines over the quarter. The remaining 12 metros were mostly flat
with not one market reaching 1% growth.
Jacksonville’s REO saturation rose by 3.2 percentage points over the quarter to 43.2%. This is
the highest rate of distressed sale activity across the largest 50 metropolitan areas, and the
largest quarterly increase for Jacksonville since early 2011. Under the pressure of rising
distressed activity, price gains have cooled dramatically. Current quarterly gains of just 0.7%
represent the lowest rate of growth for Jacksonville since mid-2011.
Contact Alanna Harter for your February 2014 file of the Top 30 MSAs or access our data on the
Bloomberg Professional service by typing CLCA <GO>.
“A few concerning indicators surfaced in February’s home data,” said Dr. Alex Villacorta, vice president
of research and analytics at Clear Capital. “Our early data shows national quarterly price gains are falling
at a rapid pace and suggest overall prices could dip into negative territory soon if current conditions
continue. In light of expected waning investor demand, higher rates of distressed sale activity signal that
the housing market still must withstand distressed sales, which account for nearly one in four
transactions. Since the market fallout in 2006, home prices have dramatically declined during sustained
periods of rising distressed sale activity. Over the last two years, however, rising distressed sales have
been offset by investor demand, which is not guaranteed to be present in 2014.
Though it is not unusual to see rising distressed activity over the winter months, the current housing
picture gives reason to be concerned. If we don’t see a correction come spring, the housing market may
be in for a long year.
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Despite year-end forecasted gains between 3% and 5%, the market is still susceptible to declines. While
the industry agrees that 2014 will be a year of moderation, we’ll likely see more concern about declines
over the next few months, as other indices catch up to the Clear Capital HDI™. We’ll keep a close eye on
our early data and markets like Jacksonville, where rising REO saturation could snowball into declines
over the short term.”
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About the Clear Capital Home Data Index™ (HDI) Market Report
The Clear Capital HDI Market Report provides insights into market trends and other leading indices for
the real estate market at the national and local levels. A critical difference in the value of the HDI Market
Report is the capability of Clear Capital to provide more timely and granular reporting than nearly any
other home price index provider.
The Clear Capital HDI Market Report
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Offers the real estate industry (investors, lenders, and servicers), government agencies, and the
public insight into the most recent pricing conditions, not only at the national and metropolitan
level, but within local markets as well.
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Is built on the most recent information available from recorder/assessor offices, and then further
enhanced by adding the company's proprietary streaming market data for the most
comprehensive geographic coverage and local insights available.
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Reflects nationwide coverage of sales transactions and aggregates this comprehensive dataset
at ten different geographic levels, including hundreds of metropolitan statistical areas (MSAs) and
sub-ZIP code boundaries.
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Includes equally-weighted distressed bank owned sales (REOs) from around the country to give
the most real world look of pricing dynamics across all sales types.
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Allows for the most current market data by providing more frequent updates with patent pending
rolling quarter technology. This ensures decisions are based on the most up-to-date information
available.
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The Clear Capital HDI Methodology
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Generates the timeliest indices in patent pending rolling quarter intervals that compare the most
recent four months to the previous three months. The rolling quarters have no fixed start date
and can be used to generate indices as data flows in, significantly reducing the multi-month lag
time experienced with other indices.
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Includes both fair market and institutional (real estate owned) transactions, giving equal weight to
all market transactions and identifying price tiers at a market specific level. By giving equal
weight to all transactions, the HDI is truly representative of each unique market.
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Results from an address-level cascade create an index with the most granular, statistically
significant market area available.
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Provides weighted repeat sales and price-per-square-foot index models that use multiple sale
types, including single-family homes, multi-family homes, and condominiums.
About Clear Capital
Clear Capital (www.ClearCapital.com) is the premium provider of data and solutions for the mortgage
finance industry. The Company’s products include appraisals, broker price opinions, property condition
inspections, value reconciliations, automated valuation models, quality assurance services, platform
services and home data indices. Clear Capital’s combination of progressive technology, high caliber in-
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house staff, and a well-trained network of more than 40,000 field experts sets a new standard for
accurate, up-to-date, and well documented valuation data and assessments. The Company’s customers
include the largest U.S. banks, investment firms, and other financial organizations. Clear Capital’s home
price data can be accessed on the Bloomberg Professional service by typing CLCA <GO>.
The information contained in this report is based on sources that are deemed to be reliable; however no
representation or warranty is made as to the accuracy, completeness, or fitness for any particular
purpose of any information contained herein. This report is not intended as investment advice, and
should not be viewed as any guarantee of value, condition, or other attribute.
Alanna Harter
Marketing Manager
[email protected]
530.550.2515
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