No Winter!

Numerous news sources are reporting that the home price forecast is trending toward something we're quite accustomed to here in severely sunny Southern California: no winter!  Real estate valuation firm Clear Capital reports that recent gains seem strong enough to plow right through the usually tepid winter season and into Q1 2013; that is, of course, if our otherwise intransigent Congress can get its act together, agree on a compromise balancing tax increases with spending cuts, and pull us back from the "fiscal cliff."  Consumer confidence and the future of our fragile recovery depend on it...

Home Prices Forecast to Weather Winter, but Will Congress Ice Gains?    

 

By: Carrie Bay

Home prices continued to reclaim lost ground in September with increases recorded for every corner of the country, Clear Capital reported Tuesday. Improvements have been so strong, in fact, the real estate valuation firm says yearly growth is forecast to shake off winter’s chill and continue through the first quarter of 2013.

That is, if federal lawmakers can keep from squashing consumer confidence, and before coming head-to-head with the end-of-year deadline, can agree on a resolution for the $500 billion in tax increases and spending cuts scheduled to take effect—a looming cloud of financial uncertainty that pundits have dubbed the “fiscal cliff.”

National home prices closed out the third quarter 3.6 percent higher than the previous year, according to Clear Capital’s latest Home Data Index (HDI). If the fiscal cliff is averted, the company projects a 2.2 percent gain nationally through the first quarter of next year with home prices defying the typical seasonal trajectory that follows the thermometer’s mercury lower.

Clear Capital’s Dr. Alex Villacorta says housing is making notable progress, with enough momentum to carry improvements well into the new year, but he warns it could all be undone by the 535 delegates representing the American people that sit atop Capitol Hill.

“[W]e’ve turned our focus to the impending fiscal cliff,” said Villacorta, Clear Capital’s director of research and analytics. “With forecasted gains of 2.2 percent over the next six months, the threat of the fiscal cliff could throw a wrench into the recovery.”

Even if Congress grinds out a fix as the curtain falls on 2012 and the cliff is avoided, Villacorta says they run the risk of damaging consumer confidence—particularly among potential homebuyers—if a resolution fails to materialize until just before the year-end deadline. “Confidence is key to turning the recovery’s near-term sprint into a marathon,” Villacorta said. “The sooner businesses and consumers are reassured, the more likely they are to build, purchase, or loan on a house.”

According to Clear Capital, the housing recovery now lies in Congress’ hands. The company draws parallels between recent bouts of economic uncertainty and declines in both consumer confidence and home prices in its latest report.

Consumers reacted negatively to the debt ceiling spectacle last summer with a 14.3 percent drop in sentiment—the largest since the end of the recession—and concurrently, home prices experienced their worst annual declines since the bottom of the market in 2009, Clear Capital reports.

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