Why the West Is Key to Every Market
For a glimpse at the direction of the overall housing market, look west, according to a new report from Clear Capital. After all, the West boasts some of the largest metro markets in the nation. When its housing markets boomed a few years ago, other markets across the country soon followed. When the downturn struck, many Western cities felt the shake-up first.
Lately, the West has posted a significant drop in distressed sales, as fewer properties fall into foreclosure. In 2009, slightly more than half of all sales in the West were from distressed properties; that has since fallen to just over 12 percent.
Investors have been branching out, particularly reaching into other markets in the South and Midwest as they sniff out more bargains. Clear Capital analysts explain that the West is seeing sharper drops in home price appreciation than some other parts of the country.
“That is why the West is really that leading indicator, the canary in the coal mine, because as the West goes, both on the downturn and in the recovery, we’ve seen the rest of the country go as well,” says Alex Villacorta, vice president of research and analytics at Clear Capital.
But some economists view the easing in appreciation from last year as a healthier overall sign for the housing market. “Many of those Western markets overshot equilibrium by a lot,” says Mark Fleming, a CoreLogic economist. “Now we are moving toward things driving the housing market the way they used to.” He says those factors include demand, an improving economy, and more jobs.
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