Clear Capital Reports 7.3% U.S. Home Price Gains, Softening REO Influences
National price gains continue positive climb; real estate owned (REO) saturation rates decline; Los Angeles and Fresno markets show positive quarterly price gains for the first time since 2006; and Chicago achieves its largest quarterly gain this decade.
TRUCKEE, Calif. – Sept. 3, 2009 – Clear Capital™, a premium provider of data and solutions for real estate asset valuation, investment and risk assessment, today released its Home Data Index" (HDI) Market Report. Patent pending rolling quarter technology significantly reduces the multi-month lag time associated with other indices to help investors, loan servicers and individual buyers and sellers make more informed, timely and profitable decisions. This month’s report features data compiled through August 25, 2009.
Key report highlights include:
- National / Four Region Overview: National quarterly price gains reach 7.3 percent, with the Midwest (16.4), South (5.7), Northeast (5.4), and West (3.0) regions all continuing to post gains. The national REO saturation rate (percentage of REOs sold to all properties sold in the last rolling quarter) dropped more than three points since last month’s report to 30.1 percent.
- Metropolitan Statistical Area (MSA) drilldown: REO saturation levels decline with 28 of the 30 major markets improving over last month’s rates. Los Angeles and Fresno return first positive quarterly price gains since mid-2006, while REO properties make up a smaller portion of California sales.
“The price changes in this month’s highest and lowest performing markets lists speak to the extremely positive summer home buying season—more than what can be attributed to seasonality,” said Kevin Marshall, President of Clear Capital.
“While we do expect more REO inventory to hit the market as we close 2009, this dramatic seasonal price and volume increase in sales of non-REO homes could create positive momentum going into the normally slow fall and winter seasons,” said Marshall. “Buyers are getting nervous that they are missing the bottom of the market, so they’re choosing to get in the market now. These factors greatly increase the chances of a springtime recovery next year.”
National/Four Region Market Overview (June 27, 2008 - Aug. 25, 2009)
Distressed sales have outpaced the inflow of new REOs over the last quarter, softening the downward pressures introduced by REOs and aiding recent price gains. This reduction in the REO saturation rate improves the chances short term price gains could extend to robust, longer-term price stabilization.
The national price gains of 7.3 percent for the most recent rolling quarter along with this month’s 3.2 point drop in REO saturation rates to 30.1 percent suggest improved conditions.
The Midwest, Northeast and South have similar yearly losses, which further highlights the disparity still present in the REO-saturated West. However, the West did continue to expand its quarterly price gain to 3.0 percent, while reducing its quarterly REO saturation rate to 41.9 percent—a 3.4 point reduction from last month.
Metro Markets (July 27, 2008 - Aug. 25, 2009)
Once again Cleveland earned the highest price gains driven by a shift in its market’s composition. Cleveland’s REO saturation rates plummeted from a late winter record of 58.5 percent to the current level of 35.2 percent. This reflects a decline in REO sales volume (-29.9%) accompanied by an 82.5 percent increase in the number of fair market sales when compared to last rolling quarter. In addition, combined sale volumes grew by 16.6 percent; and the median sale price jumped from $50,000 to $97,500 over the same period.
The magnitude of price gains among the rest of the highest performing markets continues to climb as well. These gains represent a distinct shift away from the consistently poor market conditions over the past several years and place many of these markets within striking distance of returning year-over-year gains.
All but one (St. Louis) of the markets on this month’s list saw declining REO saturation rates over last month’s figures, indicating improved conditions are spreading beyond the REO segment of the market.
Chicago (the subject of this month’s micro market analysis) returned to REO saturation levels the city saw last summer, which is nearly a ten percent improvement over its peak of 42.3 percent last winter. Similar improvement in pricing conditions placed Chicago in sixth position among the highest performing major markets.
