When Excluding Distressed Sales, Home Prices Continue to Rise

By: Esther Cho 04/04/2012
When excluding distressed sales, such as short sales and REO transactions, prices actually increased on a month-over-month basis in February, according to the February 2012 Home Price Index released by CoreLogic Wednesday. Though, when including distressed sales, prices decreased compared to the month before.
Month-over-month Home prices increased by 0.7 percent in February when not factoring in distressed sales and decreased 0.8 percent compared to the year before.
When including distressed sales, prices dropped 0.8 percent compared to the prior month in January, which is the seventh consecutive monthly decline, while year-over-year prices fell 2 percent, according to the report.
In response to this data, Capital Economics noted in its report the 2 percent yearly drop is the smallest annual decline in 18 month.
Although prices continue to decline, Mark Fleming, chief economist with Corelogic, said it is at at a decreasing rate, and when excluding distressed sales, modest price appreciation has been seen month-over-month in January and February.
“The continued strength of sales activity and tightening inventories in many markets are early and hopeful signs that prices will continue to stabilize and improve in the coming months,” said Anand Nallathambi, president and CEO of CoreLogic.
Nallathambi also added that non-distressed home sale prices represent two-thirds of all sales and have appreciated by just over 1 percent since the beginning of the year.
The 0.7 percent increase is from the end of January to end of February.
In the Capital Economics report, authored by economist Paul Diggle, the 35 percent rise in homes sales and the 20 percent fall in visible inventory over the past year-and-a-half are attributed for the stop in the dropping of House prices. The research firm forecasts another 10 percent rise in home sales this year.
“That said, widespread negative equity and still-tight credit conditions mean that significant and sustained gains in house prices are still some way off,” Capital Economics stated. “However, a few years of stability is hardly unusual following steep adjustments. And once the various constraints on demand ease, the sheer extent of undervaluation in the housing market should eventually lead to a period of stronger growth.”
For the largest core based statistical areas (CBSAs), Chicago-Joliet-Naperville, Illinois depreciated the most at 7.3 percent, while Phoenix-Mesa-Glendale, Arizona appreciated the most at 7 percent when including distressed sales. Both CBSAs had the same ranking when excluding distressed sales, but fell 3.8 percent and increased 3.9 percent, respectively.
Five states with highest appreciation
(Including distressed sales)
1. West Virginia (+8.6 percent)
2. Michigan (+5.8 percent)
3. Florida (+4.7 percent)
4. Arizona (+4.5 percent)
5. South Dakota (+4.1 percent)
Five states with the greatest depreciation
(Including distressed sales)
1. Delaware (-11.2 percent)
2. Connecticut (-7.9 percent)
3. Rhode Island (-7.8 percent)
4. Illinois (-7.1 percent)
5. Georgia (-6.6 percent)
Five states with the highest appreciation
(excluding distressed sales)
1. South Dakota (+5.9 percent)
2. West Virginia (+5.6 percent)
3. Maine (+4.5 percent)
4. Utah (+3.7 percent)
5. Montana (+3.6 percent)
Five states with the greatest depreciation
(excluding distressed sales)
1. Delaware (-8.7 percent)
2. Connecticut (-4.9 percent)
3. Nevada (-4.6 percent)
4. Vermont (-4.0 percent)
5. Minnesota (-3.3 percent)
(Source : CoreLogic)