Clear Capital, a provider of data and solutions for real estate asset valuation, investment and risk assessment, released its Home Data Index (HDI) Market Report with data through October 2011. Report highlights include:
►Nationally, the -2.8 percent year-over-year price decrease marked 13 consecutive months of declines.
►U.S. quarterly home price gains through October retreat to near flat levels with only 0.6 percent growth, compared to the 3.5 percent rolling quarter increase reported through September.
►Three of the four U.S. regions post slight quarterly gains, but at rates well off their summer growth.
►Nationwide, local markets experienced a general downward trend as the 15 highest performing major markets posted softer gains, while the 15 lowest performing markets experienced stronger declines.
►Cleveland, Ohio, was the highest quarter-over-quarter performer with a 6.2 percent price increase, while Las Vegas was the lowest performing market with a -3.4 percent price decrease.
“October home price gains have leveled out, confirming what our data has pointed to over the last several months,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital. “Short-term gains have been nearly eliminated while longer-term performance measures point to mostly negative territory through the turn of the year. With current tepid demand expected to weaken even more, consumer confidence at record lows, and as the distressed inventory continues to flow into the market, we can expect another long winter as the housing market will truly be put to the test against these downward forces.”
For the quarter, U.S. home prices fell flat with only a slight gain of 0.6 percent through the end of October. The slight gains seen this month indicate a slowing down of growth relative to last month’s 3.5 percent gains, and indicate the effects of the slower buying season are now upon us.
The West is showing continued weakness and is the first region to dip into negative territory quarter-over-quarter, posting a loss of one percent, comparing to a 0.3 percent increase last month. Looking at year-over-year prices, the West is also posting the largest declines, down 5.5 percent.
The Midwest checked in with solid quarterly growth of 2.6 percent, but when compared to last month’s growth of 7.2 percent, it becomes clear the strong Midwest is also starting to feel that oncoming winter chill.
The highest performing markets in this month’s report lost considerable momentum when compared to last month. With double digit returns in the rearview mirror, Cleveland led all markets with solid 6.2 percent gains. However, this is tempered with the fact that Cleveland is also one of the nation’s most volatile markets, and is still sitting 58.1 percent below its market highs from the first quarter of 2005.
Growth was so subdued this month, that nearly half of the markets returned quarterly gains of less than three percent, and our 15 highest performing markets encountered a significant amount of turnover compared to last month’s report with eight new MSAs finding their way into the top 15 markets.
The South saw seven of its metro markets added to our “Top 15” list, including Jacksonville, Tampa, Dallas, Miami, Nashville, Orlando, and Virginia Beach, but these particular metros were not strong enough to help the region as a whole which grew only 0.5 percent in the quarter.
As markets across the country begin to experience a seasonal slowdown, the less-volatile Florida markets moved into the highest performing list for a number of reasons including higher resistance to seasonal downturns and a lower rate of distressed sales. All four Florida markets included in this group are still struggling with high real estate-owned (REO) saturation overall, but have seen their rates significantly drop (an average 16.2 percentage points) since the first quarter of 2011, and it is this trend that favorably affects overall prices.As a whole, the REO saturation rate for the highest performing markets was less than 23 percent, compared to 30 percent for its lowest performing counterparts.
The lowest performing markets gave back most of the gains from the buying season. In the August, September, and October’s Market Reports, no fewer than seven of the 15 lowest performing markets posted quarterly gains, however, in this month’s report, all 15 markets posted quarterly declines.
Unlike the higher performing counterparts, our lowest markets showed less turnover, trading out only five MSAs from last month. With high rates of REO saturation (seven markets experienced a distressed rate higher than 35 percent) this same consistency is expected going forward as these areas work through their oversupply of distressed inventory.