Clear Capital Reports Signs of Housing Market Stabilizing

June 9, 2011 (Brian Michael)

Clear Capital reports that there are signs of market stabilization for the upcoming summer buying season as U.S. quarter-over-quarter home prices through the end of May declined only 2.3 percent according to data from its latest Home Price Index (HPI), which was half of what the decline was in last months report.

Year-over-year home prices for the same quarter were down 7.6 percent, which was an increase from 5.0 percent in last months report and sets prices back to levels not seen since the year 2000.

“The latest Market Report results through May suggest that home prices are starting to ease back from the heavy declines seen over the winter,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital. “We are still far away from the strong demand needed to fully turn things around for the housing market; however, it is clear from the initial spring sales data that prices are softening, suggesting stabilization in the market."

The Real Estate Owned (REO) saturation rate, the percentage of all transactions that were distressed properties, dropped to 33.9 percent, which was down from April’s rate of 34.5 percent. There was also good news concerning REO prices with the latest data showing that the price paid for distressed properties has increased 5.0 percent over the last three quarters which Clear Capital attributes to increased activity in the higher-end REO market.

“The saturation rate has leveled off after climbing 10 percent since July 2010, with the latest data showing national REO saturation holding steady at 33 percent,” added Villacorta. “The median price paid for distressed properties has risen over the past three quarters, which is a good sign that the REO market segment is seeing increased activity toward the upper end of this space.”

The top performing market for the current quarter through the end of May was the Washington D.C.-Arlington, VA-Alexandra, VA area which experienced price increases of 4.5 percent quarter-over-quarter. They were followed by St Louis, MO (2.2%), Pittsburgh, PA (1.6%), New York, NY-Long Island, NY-No. New Jersey, NJ (1.5%), and Virginia Beach, FL-Ft. Lauderdale, FL-Miami Beach, FL (0.6%)

The worst performing market for the current quarter was the Detroit, MI-Warren, MI-Livonia, MI area which experienced price declines of 13.2 percent. They were followed by New Orleans, LA-Metairie, LA-Kenner, LA (-10.9%), Hartford, CT-West Hartford, CT-East Hartford, CT (-10.7%), Cleveland, OH-Elyria, OH-Mentor, OH (-10.1%, and Columbus, OH (-10.1%).

Detroit, Cleveland, and Columbus were especially hard hit by high REO saturation rates of 58 percent, 44.3 percent, and 45.6 percent, respectively, as distressed home prices in these areas bucked the nation wide trend by declining instead of increasing.

You can read the HPI report in its entirety on Clear Capital's website here.

Tags: Clear Capital, Home Price Index, HPI, market stabilization, summer buying season, REO, home prices, saturation rate, distressed home prices