Home Prices Continue to Fall in the West
Home prices continue to decline in the West over the last three months by 4.3%, according to Clear Capital’s monthly Home Data Index Market Report.
However, the rest of the country is seeing stable home prices with a national quarter-over-quarter price decrease of 1.3%, the highest figure in the last six months.
“The latest data through March supports our view that many markets are continuing to see relief from the significant price declines we observed through January,” said Alex Villacorta, director of research and analytics at Clear Capital. “While some markets are already in double-dip territory, specifically in the West, widespread fear of a collective fall in market prices is overstated.”
Western home prices are the lowest level since 2001. The real estate data company cited distressed activity, which has seen total sales increase nearly 10% since the second quarter of 2010 and is now at 40.8%, as a reason why the Western market has underperformed.
In the five lowest performing Western major markets, REO saturation remained high, averaging 41.8%, while the South, Midwest and Northeast markets on the list had an average of 25.6%.
“Looking deeper at the disparity between the West and the other regions, we find that the rate of change in REO saturation continues to serve as a leading indicator of home prices,” Villacorta said. “For example, out of all the regions, only the West showed acceleration in its REO saturation from the previous quarter.”
The firm is encouraged to see home prices in the Northeast, Midwest and South remain flat last quarter despite a cold winter buying season and ongoing foreclosure pressures. These prices stabilized due to improvements in REO saturation and unemployment.
Led by Bridgeport, Conn., which had a 9.4% increase in home prices over the previous three months, all 15 of the highest performing major markets posted quarterly-over-quarterly gains for the first time in six months. The Ohio cities of Cleveland, Cincinnati and Columbus were the only markets not located in the South and Northeast to make the list.
The majority of the lowest performing markets were located in the West and Midwest. Eleven of the 15 markets on this month’s lowest performing list had quarterly prices deteriorate from last month’s report. For the third straight month, Detroit had the largest quarterly decline of 18.9%, a decrease of 5.6% from last month.
Since reaching its peak mark in the summer of 2010, home prices in the West have declined every month. Clear Capital said there are no signs of stabilization for the region due to this consistency.
But Clear Capital is optimistic that there will be better overall national figures when the year is over if there are many seasonal homebuyers.
“Looking ahead, should the traditional spring and summer buying seasons prove substantial, home prices at the national level could reach positive quarterly gains before the end of 2011,” Clear Capital said. “Distressed activity, however, remains high and should void gains in the West.”