Improving Distressed Saturation Levels - Clear Capital - HDI™
HDI Market Report & Forecast

Improving Distressed Saturation Levels Could be Key to Spring Market Kickstart

By March 7, 2016 No Comments

The March Clear Capital Home Data Index (HDI) Market Report releases recent and granular data through February 2016, providing insights into housing price trends and other leading indices for the real estate market at the national and local levels.

Winter continues to slow growth in housing price appreciation across the nation, but distressed saturation levels – the percentage of real estate owned and short sales to all sales – could point to a strong market return come spring.

  • Across the nation, regions continue to wane in quarter-over-quarter (QoQ) growth in home prices during the slow winter real estate season. Since last month, the West has downticked 0.1% to 0.9% quarter-over-quarter, though still the highest regional growth figure in the nation, while the Northeast and Midwest have each fallen 0.2% to 0.3% QoQ growth. The downward trend continues nationally, as well, with the national quarter-over-quarter growth rate falling 0.1% to 0.6% during the lows of winter. The South appears to be the only region in the nation that has not lost ground in the last month, as it holds steady at relatively decent 0.6% quarterly gains.
  • On the MSA market level, there are several markets that are reporting increasing QoQ growth in home prices since last month, an uncharacteristic upward move during the winter season. Nashville, TN is up 0.3% since last month to 1.3% QoQ growth, while Seattle, WA has increased 0.2% to 1.6% quarterly price change, tied with Providence, RI for the top spot on the performing market chart.
  • While the bottom performing markets do not appear to be dominated by any single region, western presence is noticeably lacking. Apart from Honolulu, HI, which is reporting positive 0.3% QoQ growth, there are no MSAs from the West in this month’s lowest performing markets, a sign that the region is proving to be more resilient to the troughs of winter growth.
  • There are signs that this spring is shaping up to be a healthier one than spring of 2015, when considering the overall levels of distressed saturation across the nation’s largest markets. For 80% of the nation’s top 50 markets, the percentage of distressed properties on the market is down from March 2015, with Tampa and Orlando having the best improvements—down 7.8% and 10.4% respectively.  Most markets are down between 1-4%, and only three markets, Baltimore, Hartford, and Rochester, have higher distressed saturation levels at an increase of 2.0% or more, as shown in Graph 1 below.


“As winter continues to slow quarterly growth across most areas of the nation, there are several MSAs that are showing resistance to the usually lethargic season. This is a good sign that the current economic and financial market instabilities are not greatly affecting all corners of the real estate industry, yet shows that there is still volatility in the market across various factors. At the end of the day, however, the decline in the number of distressed properties from March 2015 to March 2016 is promising. As the legacy of the housing crash continues to subside, markets become healthier and more stable in the long run.

Conversely, lower levels of distressed saturation will also mean fewer opportunities for investment buyers, potentially leading to lower demand in certain areas of these markets. As the slow season thaws and the spring kickstart of the real estate season nears, we’ll get a better idea of how consumer confidence and economic uncertainty, along with the distressed saturation levels, will ultimately affect the nation’s housing industry”, states Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital.


Graph 1. Change in prices from March 2015 through February 2016. Source: Clear Capital®


 National and Regional Markets
Market Qtr/Qtr% +/- Yr/Yr Distressed
National 0.6% 4.7% 14.7%
West 0.9% 7.3% 10.3%
Northeast 0.3% 1.7% 12.9%
South 0.6% 5.3% 17.8%
Midwest 0.3% 4.0% 16.5%

Chart 1. National and Regional distressed saturation and changes in home prices from last quarter and last year. Data through February 2016. Source: Clear Capital®


 Highest Performing Major Metro Markets
Rank Metropolitan Statistical Area Qtr/Qtr% +/- Yr/Yr Distressed
1 Providence, RI — New Bedford, MA — Fall River, MA 1.6% 6.1% 12.4%
2 Seattle, WA — Tacoma, WA — Bellevue, WA 1.6% 11.0% 10.6%
3 Denver, CO — Aurora, CO 1.4% 11.5% 6.4%
4 Nashville, TN — Davidson, TN — Murfreesboro, TN 1.4% 8.0% 9.9%
5 Tampa, FL — St. Petersburg, FL — Clearwater, FL 1.3% 10.3% 24.8%
6 Phoenix, AZ — Mesa, AZ — Scottsdale, AZ 1.3% 8.4% 11.2%
7 Orlando, FL 1.3% 8.9% 25.8%
8 Las Vegas, NV — Paradise, NV 1.3% 9.3% 18.2%
9 Portland, OR — Vancouver, WA — Beaverton, OR 1.3% 9.7% 10.9%
10 Houston, TX — Baytown, TX — Sugar Land, TX 1.2% 9.1% 3.5%
11 Sacramento, CA — Arden, CA — Roseville, CA 1.2% 8.4% 11.4%
12 Miami, FL — Ft. Lauderdale, FL — Miami Beach, FL 1.1% 10.1% 22.7%
13 San Francisco, CA — Oakland, CA — Fremont, CA 1.1% 8.1% 6.5%
14 Jacksonville, FL 1.1% 8.1% 27.8%
15 San Diego, CA — Carlsbad, CA — San Marcos, CA 1.1% 7.0% 9.5%

Chart 2. Highest Performing Major Metro Markets through February 2016. Source: Clear Capital®


 Lowest Performing Major Metro Markets
Rank Metropolitan Statistical Area Qtr/Qtr% +/- Yr/Yr Distressed
1 Rochester, NY -0.7% -0.7% 13.7%
2 Memphis, TN -0.5% -2.1% 27.4%
3 Birmingham, AL — Hoover, AL -0.1% 0.9% 15.8%
4 Milwaukee, WI — Waukesha, WI — West Allis, WI 0.0% 3.8% 7.1%
5 Richmond, VA 0.0% 2.5% 15.6%
6 Virginia Beach, VA — Norfolk, VA — Newport News, VA 0.1% 1.9% 19.5%
7 New Orleans, LA — Metairie, LA — Kenner, LA 0.1% 5.7% 18.0%
8 Philadelphia, PA — Camden, NJ — Wilmington, DE 0.2% 2.4% 17.9%
9 Pittsburgh, PA 0.3% 2.8% 11.1%
10 Honolulu, HI 0.3% 5.2% 7.5%
11 Baltimore, MD — Towson, MD 0.3% 1.1% 25.6%
12 Dayton, OH 0.3% 2.8% 21.2%
13 Cleveland, OH — Elyria, OH — Mentor, OH 0.4% 2.8% 19.5%
14 Washington, DC — Arlington, VA — Alexandria, VA 0.4% 2.1% 15.4%

Chart 3. Lowest Performing Major Metro Markets through February 2016. Source: Clear Capital®

About the Clear Capital® Home Data Index (HDI) Market Report

The Clear Capital HDI Market Report provides insights into market trends and other leading indices for the real estate market at the national and local levels. A critical difference in the value of the HDI Market Report is the capability of Clear Capital to provide more timely and granular reporting than nearly any other home price index provider.

The Clear Capital® HDI Market Report

  • Offers the real estate industry (investors, lenders, and servicers), government agencies, and the public insight into the most recent pricing conditions, not only at the national and metropolitan level, but within local markets as well.
  • Is built on the most recent information available from recorder/assessor offices, and then further enhanced by adding the company’s proprietary streaming market data for the most comprehensive geographic coverage and local insights available.
  • Reflects nationwide coverage of sales transactions and aggregates this comprehensive dataset at ten different geographic levels, including hundreds of metropolitan statistical areas (MSAs) and sub-ZIP code boundaries.
  • Includes equally-weighted distressed bank owned sales (REOs) from around the country to give the most real world look of pricing dynamics across all sales types.
  • Allows for the most current market data by providing more frequent updates with patent pending rolling quarter technology. This ensures decisions are based on the most up-to-date information available.

Clear Capital® HDI Methodology

  • Generates the timeliest indices in patent pending rolling quarter intervals that compare the most recent four months to the previous three months. The rolling quarters have no fixed start date and can be used to generate indices as data flows in, significantly reducing the multi-month lag time experienced with other indices.
  • Includes both fair market and institutional (real estate owned) transactions, giving equal weight to all market transactions and identifying price tiers at a market specific level. By giving equal weight to all transactions, the HDI is truly representative of each unique market.
  • Results from an address-level cascade create an index with the most granular, statistically significant market area available.
  • Provides weighted repeat sales and price-per-square-foot index models that use multiple sale types, including single-family homes, multi-family homes, and condominiums.
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