Home Prices to Increase Modestly by Year-End: Clear Capital

According to Clear Capital’s assessment, the nation lost 1.4 percent in home values from March 2011 through March 2012, which is slightly better than February’s year-over-year decline of 1.9 percent.
REO saturation, which traditionally pushes down prices, continued to climb last month, Clear Capital reported. It was the second month in a row that distressed property sales as a percentage of total sales increased for the nation and all regions.
Clear Capital says its findings confirm speculation that finalization of the attorneys general settlement has led servicers to become more aggressive in moving their REO backlog onto the housing market.
In March, the national REO rate went up 1.2 points from the previous month’s reading to hit 27 percent, pointing to an acceleration of REO sales. The Midwest contributed the most to the increase, jumping 3.8 points to 34.3 percent, with the other regions all seeing softer increases.
Of particular interest this month, according to Clear Capital, is how the changes in REO saturation are affecting prices. In the past, there has been a consistent inverse relationship between changes in REO saturation and prices, but not in March’s study. Although their REO rates increased, the West, Northeast, and South regions also saw home prices increase.
These geographies are exhibiting a pricing resilience to REO saturation that has not been seen in previous analyses, Clear Capital says. The company says it could be explained by improvement in jobs numbers recently, rapidly increasing investor activity in certain regions, and a general increase in consumer confidence.