Index Provides Better Picture of Collateral Value
Integrated Asset Services LLC joined the ranks of home price index producers recently, saying it provides "more granular data" that demonstrate "pockets of opportunity" for nonperforming loan buyers.
While "on a national level, the housing picture is still challenging," IAS said in a press release that, "the picture at the regional level is far more encouraging."
David McCarthy, president and chief executive officer of Integrated Asset Services, told MSN that many index providers do not break data down far enough to see some of the pockets of opportunity within an area. He said Denver provides an example of this, as parts of that market are "tanking while other parts" are "doing real well."
Carl Cozine, chief scientist at IAS, told MSN that the index has been in development for two years and facilitates an automated valuation model product the company has. He said the company has put a lot of time into the product's creation. While based on historic data, the index also allows for forward projections, although Mr. Cozine warns that such projections get less reliable the further ahead they attempt to look, like weather forecasts. Asked if the index shed light on what many see as an unprecedented housing market cycle, Mr. McCarthy said it is one in which home price behavior is "certainly more volatile" than in the past.
The IAS360 House Price Index tracks monthly changes in the median sales price of detached single-family residences in more than 15,000 neighborhoods across the United States, IAS said. The April data indicate "measurable improvements in some of the nation's hardest-hit areas" despite the fact that many areas are still in the throes of the credit crunch, IAS said. For example, the Midwest "rebounded nicely" with a 5.90% gain in median sales prices, according to IAS. "Given the granularity, the methodology, and the timely monthly reporting of the IAS360, we are able to provide the market with early warning signs on housing price trends," said Mr. McCarthy, in a press release. "When the housing markets are rosy, a 50,000-foot view may be acceptable. But when we are facing tumultuous markets, we need to go deeper."
IAS is a provider of default management and residential collateral valuation services.
Other recent indexes paint the following pictures of home values in today's market: Global Insight, an economic forecasting and analysis firm, found that home values fell in 84% of the nation's housing markets during the first quarter. The company said home values declined nationally for the third consecutive quarter, dropping at a 6.7% annualized rate. Of the 330 markets covered by Global Insight's housing analysis, 262 saw values decline in the first quarter. Markets in California, Florida and Michigan saw the steepest losses in the analysis. The company said a slowdown in the sale of expensive homes, the sale of a large number of foreclosed homes at a discount, and tighter mortgage underwriting standards have all contributed to the national price decline. On the bright side, Global Insight's James Diffley, a group managing director, said that fewer markets are now overvalued. "The large price adjustments we have seen are precisely what was required before we could begin to talk of recovery," he said.
The latest LoanPerformance Home Price Index reports that home prices in 42 states showed a three-month decrease in March and that 90% of the statistical areas studied had inflation-adjusted price declines. Los Angeles-Long Beach-Glendale topped the index's list of areas experiencing three-month home price declines at a 7.41% decrease. Cleveland-Elyria-Mentor ranked second with a 7.38% decline, and Oakland-Fremont-Hayward, Calif., third at 7.33%. "Two-thirds of all states now show year-over-year real estate declines, according to this latest LoanPerformance HPI release," said Mark Fleming, chief economist of First American CoreLogic, the Santa Ana, Calif. company that compiles the index. "Although only one-third of [core-based statistical areas] are depreciating on a nominal basis, on an inflation-adjusted basis 90% of CBSAs are experiencing real price declines." (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/