The Three Percent Solution

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Continued on Page 44 Th e M Rep o RT | 43 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t ANALYTICS The laTesT Knight. "The data showed a clear difference in the levels of recovery among home price tiers." One of the best examples of Black Knight's findings is Nevada, which suffered more than most states in the crash and is still 39 percent off its pre-crisis peak. According to the company, properties in the lowest 20 percent of the state's housing market are down 47 percent from their peaks compared to 36 percent for the highest tier. Despite those areas where homes were overvalued, California is even worse. Properties in the Golden State's highest level are about 3 percent from their previous highs, while those at the bottom are still off by nearly one-third. Most of the difference in performance comes back to the fact that higher-value homes already had an advantage when the recovery started: They weren't hit as badly when prices turned south, according to Barnes. "In many cases, these disparities between price tiers can be attributed to the fact that during the bubble, lower-tier properties appreciated at much higher rates than higher-valued properties and likewise fell harder and further when the bubble broke," he said. Price recovery isn't the only area in which the lower-tier market has struggled. According to CoreLogic, while improvements in home equity have pushed nearly nine in 10 properties out of underwater status, most of those gains have been at the high end of the market, with 94 percent of homes valued at more than $200,000 in positive equity. By comparison, 95 percent of properties below that line are right-side up on their loan. Meanwhile, Zillow reported in November that the inventory of for-sale homes in the most affordable price tier was up only 68.3 percent over the year. That compares to an increase of 82.2 percent in the highest tier. "Even as conditions improve for buyers overall, it remains a tough row to hoe for first-time buyers and lower-income buyers, especially compared to their more well-off contemporaries," said Zillow Chief Economist Dr. Stan Humphries. report details Highlights and lowlights of 2014 Last year's choppy seas may lead to smooth sailing for the housing market this year, says i t's been a rollercoaster year for the U.S. housing market, but analysts at Realtor. com say the patterns seen in 2014 could be the foundation for more stable growth in the coming year. Late last year, the company pre- dicted a comeback in first-time home- buyers as young adults prepare to take the next step in their lives amid improving economic conditions. With job growth and home inven- tory making strides toward recovery and mortgage rates remaining histori- cally low, expects the momentum seen this year will carry over into the next. Overall, the housing market in 2014 "showed steady ad- vances over 2013 with significant improvement in key housing metrics, despite some remaining challenges," said Jonathan Smoke, chief economist for "Increases in job creation and gross domestic product have had a significant impact on con- sumer confidence and homebuyer demand. Paired with historically low interest rates, these factors kept properties moving quickly." In its year-end review, Realtor. com outlined some of the major trends seen last year that signal a strengthening housing recovery.

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