Clear Capital has released its monthly Home Data Index (HDI) Market Report, showing U.S. home prices have decreased by 3.2 percent in the first six months of 2011 despite news of a second quarter uptick in home prices, and are forecast to stumble another 2.4 percent in the second half of 2011.
“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 Dr. 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."
Highlights of the June HDI include:
►The U.S. quarterly home price gain of 0.9 percent in the second quarter, after nine months of decline, provides encouragement against current economic and foreclosure trends.
►The Midwest was particularly hard hit in the first half of 2011, with prices in Detroit for example falling nearly 20 percent ($12,000 dollars on average on a typical $62,500 home).
►Halfway through 2011, the U.S. real estate-owned (REO) saturation rate remains at 31.4 percent, compared to the 33.1 percent reported at the end of the first quarter. This number, while historically very high, is clearly trending slightly downward with absorption of REO property.
►Only five U.S. markets are forecast to produce home price gains in the second half of 2011 including: Washington, D.C.; New York; Orlando, Fla.; Dallas and San Francisco.
“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,” said Villacorta.
The first half of 2011 continued the price declines experienced across much of the U.S. in 2010 as prices continued to face pressure from high unemployment and REO saturation rates above 31 percent. Home prices for the first half of this year have also been affected by a reversal of price gains from the 2009 and 2010 homebuyer tax credits.
The wild spikes in price trends experienced in 2010 have given way to more gradual trends in 2011. Declines of 3.2 percent through the first half of 2011 contributed to the overall eight percent decline since June 2010.
Prices were also pushed downward by 4.1 percent in the first quarter of 2011 due to the slow winter homebuying season creating the “double dip” in April 2011, and breaking through the previous low mark set in Q1 2009. Since then, U.S. price declines have seen modest gains, and while varying according to each local market, it is unlikely national home prices have reached a true and sustainable bottom.
The future outlook continues to point to a fragile housing market. However, the aforementioned quarterly increase of 0.9 percent is an encouraging sign that the markets are capable of positive price growth despite the first quarter lows and the continued economic and foreclosure pressures. Even with the recent gain in quarterly home prices, current price levels effectively match the levels seen in Q1 2009, and hover near the levels last seen in mid-2000.
