Monday, November 7, 2011

Home Price Growth Has Dissipated With the Summer Heat: Clear Capital

Temperatures are falling, and so are home prices in most local markets. Clear Capital says it’s expecting another long winter as the housing industry tries to cope with the downward forces of weak demand, record-low consumer confidence, and distressed inventory.

Quarterly home price gains through October retreated to near-flat levels with only 0.6 percent growth at the national level, compared to the 3.5 percent quarterly increase reported by Clear Capital in September.
The California-based valuation company says the seasonal gains seen during the stronger spring and summer months have not been enough to push year-over-year home prices into the black.
Clear Capital’s October index reading puts national home prices 2.8 percent below a year ago. It marks the 13th consecutive month that annual price changes have fallen on the minus side of the data chart.
“October home price gains have leveled out, confirming what our data has pointed to over the last several months,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital. “Short term gains have been nearly eliminated while longer term performance
measures point to mostly negative territory through the turn of the year.”
Across the nation, local markets experienced a general downward trend in October as the highest performing markets posted softer gains and the lowest performing markets experienced stronger declines.
The West is showing continued weakness and Clear Capital says it is the first region to dip into negative territory coming off the summer months, posting a loss of 1.0 percent quarter-over-quarter in October, compared to a 0.3 percent quarterly increase the month before.
On an annual basis, the West is also posting the largest decline, with home prices down 5.5 percent.
The Midwest checked in with solid quarterly growth of 2.6 percent last month, but when compared to the previous month’s growth of 7.2 percent, Clear Capital says it’s clear the strong Midwestern markets are also starting to feel that oncoming winter chill.
Looking at individual metro areas, Clear Capital’s data show Cleveland, Ohio, was the highest quarter-over-quarter performer last month with a 6.2 percent price increase, while Las Vegas, Nevada, was the lowest performing market with a 3.4 percent decrease.
Price differentials between high-performing and low-performing markets can largely be attributed to the number of distressed properties changing hands.
As a whole, the REO saturation rate – calculated as the percentage of bank-owned homes sold as compared to all properties sold – for the highest performing markets is less than 23 percent, according to Clear Capital. It averages 30 percent for the lowest performing counterparts.
Some lowest performing markets are dealing with REO saturation rates close to the 50 percent mark, including Las Vegas (49%) and Detroit (47%).

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