Despite real estate-owned saturation rates rising, national home prices through February reached the lowest levels of decline in over 10 months, according to the real estate asset valuation provider Clear Capital.
Over the last year, home prices were down 1.9% while quarter-over-quarter values remained nearly stable with only a 0.6% fall.
Even though three out of four regions nationwide saw more REO properties up for sale, all four geographic markets showed “unusual and encouraging” improvements in quarterly and yearly home prices compared to January, the Truckee, Calif.-based company said.
The largest REO saturation rate increase was in the Midwest at 32.2%, up 2.1% from January, consequently leading to the biggest drop in yearly and short-term home values at 4.3% and 1.8%, respectively. Other deterrents affecting home prices in this region were high levels of unemployment and a slow down in home sales due to the winter season.
The Western market saw its total REO saturation rate increase nearly 1% over the last month reaching 32.1%. This is about 6% greater than the national average of 25.8%. However, the region only experienced a 0.4% quarterly fall in home prices and a year-over-year value depreciation of 3.2%.
The East is the last region that saw its REO saturation rate rise over the last month by 1% and is now sitting at 8.8%. In this area, home prices virtually unchanged over both the previous quarter and year, down 0.1% and 0.5%, respectively.
Despite a slight decrease in REO saturation (0.6%), the South still hovers around the national average at 23.7%. Home values remained steady here as they were down only 0.2% for the quarter and 0.8% for the year.
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With this uptick in REO activity, we’ll be keeping a very close eye on the effects of the Attorneys General settlement with servicers, as it could dramatically change the flow of REO properties moving through the foreclosure process and significant impact values in the near future,” said Alex Villacorta, director of research and analytics at Clear Capital.
Clear Capital said the top 15 highest performing metropolitan statistical areas, which all experienced quarterly price growth, had an average REO saturation level of 27.3%. However, just six of the top 15 showed growth greater than 2%.
For the lowest performing markets, quarterly losses eased in February, averaging 4.1% against an average loss of 4.7% during the prior month. Average REO saturation rates also were up for these MSAs, averaging 30.9%, up from last month’s 28.5%.
Cleveland was the worst performing MSA in February with a quarterly loss of 9.4% and price decreases of 7.3% for the year.
“The good news is the improvements in the job market, stronger consumer confidence and the heightened activity of investors—often with cash—in the lower price tiers,” Villacorta said. “These effects put upward pressure on prices, and could be in play with the resiliency we’re seeing in prices against increasing REO this month.”
