Despite a recent uptick in national home prices, Clear Capital reported that home values are down 3.2% for the first six months this year and the real estate data firm is projecting another 2.4% fall through the second half of 2011.
In Q2 2011, home prices increased 0.9% to help stabilize the market after a “double dip” occurred in April. The firm said this shows “encouragement against current economic and foreclosure trends,” but is forecasting that only five markets are going to produce home price gains through the second half this year including Washington DC, New York, Orlando, Dallas and San Francisco.
Another encouraging sign for the industry is that the national REO saturation rate is at 31.4% through June 2011. At the end of the first quarter, the rate was 33.1%, and the firm said REO properties are clearly being absorbed throughout the country.
“At the mid-point of the year, it’s promising to see the overall market shake off the string of declines observed since late last year, especially in light of significant challenges for the industry,” said Alex Villacorta, director of research and analytics at Clear Capital.
“However, we have yet to see the burst in consumer demand to avoid posting a net loss in national prices for the year.”
The Midwest was one of the regions that experienced difficult times this year, specifically Detroit where home prices fell approximately 20%, nearly $12,000 on average for a $62,500 home. All four national regions are likely to experience negative trends over the next six months, with the West and Midwest continuing to be the hardest hit, Clear Capital said.
However, Clear Capital believes home prices at the local level are expected to show more stability during the second half of the year. For example, nine of the lowest 15 performing markets are expected to maintain or slow their price declines compared to the first half of the year, but none of these markets are forecast to produce net gains for 2011.
“While most individual markets are also projected to post losses for the year, it is clear prices have begun to level off and are not exhibiting as much volatility as we’ve seen since the downturn began,” Villacorta said.
