Clear Capital released its Home Data Index (HDI) Market Report with data through the end of February 2012. The HDI Market Report uses a broad array of public and proprietary data sources to include data current up through the previous month.
February report highlights include:
• Year-over-year home prices for the nation are down, with quarter-over-quarter prices remaining very stable.
• All regions showed improvements in quarterly and yearly prices, while three out of four saw upticks in REO saturation.
• Top 15 MSAs were resilient against notably higher REO saturation, and showed higher average gains than last month.
• All of the lowest performing MSAs saw quarter-over-quarter losses, but softer than in February.
“Home prices across the nation saw light levels of depreciation in February, consistent with the trend we have seen over the last several months,” said Alex Villacorta, director of research and analytics at Clear Capital. “However, the Northeast, Midwest and West improved performance against last month’s quarterly declines in light of increases in REO saturation, which is unusual and encouraging.”
“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 significantly impact values in the near future,” Villacorta added. 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. 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.”
Although national home prices went down 1.9 percent year-over-year, the loss represented the lowest level of decline in over 10 months. The national short term numbers were also better than recent months with a loss of only 0.6 percent quarter over quarter, very close to the sixth month performance, and highlighting the short term stability we’ve seen over last four months.
At the regional level, short term numbers were all slightly negative, with the largest hit being in the Midwest with a 1.8 percent drop in values. This region is still fighting hard against broader issues such as higher unemployment and REO saturation than the rest of the nation and the winter season slowdown that tends to hit the Midwest relatively hard. The West posted a relatively high level of year-over-year price depreciation but showed a higher degree of stability in quarterly numbers, which is a positive sign for the region which has struggled over the last year. The Northeast continues to show relative strength with small, but positive growth in year-over-year and 6 month values, along with very low REO saturation. And the South posted very little change at all in its short term and long term numbers.
Three out of four regions saw increasing levels of REO saturation but fought hard against the usual and often dramatic downward pressure on prices it brings. In fact, the regions saw higher REO saturation, the seasonal effects of winter, and an unsettled political environment (election year) but resisted these negatives effects surprisingly well. Price stability in this environment indicates the presence of positive forces, which could be the improving unemployment numbers, an increase in investor activity, and an increase in overall demand.
Each metro on the list held onto quarterly gains, but with just six of the Top 15 showing price growth of greater than 2 percent. However, the quarterly gains for this group averaged 2.4 percent against the 1.5 percent average quarterly gain posted for the Top 15 group last month.
Surprising for this month was that the Top 15 group had an average REO saturation level at 27.3 percent, which is 1.5 percentage points above the national level of 25.8 percent. While Las Vegas made its way into the Top 15 performing markets with a small quarterly gain of 0.8 percent against an annual loss totaling 6.7 percent, there are indications this market is not yet heading in the right direction. Underlying the small growth for this month are substantial declines in the low tier segment of that market, or those homes selling for $65,000 or less. This goes squarely against the trend seen in other hard hit areas such as Orlando, Miami and Phoenix where prices are going up in the lower price tiers as investors are paying cash to take advantage of the rental markets.
The lowest performing 15 markets are clearly not as resilient to the seasonal slowdown and increased REO saturation as compared to the other MSAs tracked. While all metros in this group posted negative numbers for the quarter, all but two also showed price declines year-over-year as well. Additionally, six out of 15 markets saw prices shrink by more than five percentage points over this time last year.
Cleveland was the hardest hit market in the nation this month, losing 9.4 percent of its value quarter-over-quarter. It was also hit hard with REO saturation, jumping a dramatic 3.8 percentage points over last quarter, putting it well above the national average of 25.8 percent.
Even with the poor performance of Cleveland there may be some good news. It is another example of a metro market where lower priced home sales ($28,000 and less in this case), are gaining in value while higher priced home values are dropping. Cleveland tacked on 3.4 percent in the low price tier, indicating there may be increased demand from investors taking advantage of low prices and building a value base in this market.