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Clear Capital Reports U.S. Home Prices Flat – Is No News Good News?
U.S. quarter-over-quarter home prices hold their ground and post an increase of 0.3%, while REO saturation rates remain near 25%.
TRUCKEE, Calif. – Dec. 8, 2011 – Clear Capital (clearcapital.wpengine.com), 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 with data through November 2011.
Report highlights include:
- U.S. quarter-over-quarter home prices remained flat, posting a slight 0.3% increase, down from the 0.6% quarterly increase reported last month.
- Quarterly price movements have become more aligned across the four regions within the U.S., with only 2.0 percentage points separating the highest performing region (Midwest at 1.2%) and the lowest performing region (West at -0.8%).
- Though the national year-over-year price change of -2.2% showed slight improvement over last month’s report (-2.8%), it marked 14 consecutive months of yearly declines.
- REO saturation rates remain stable nationally at 24.6% of all transactions.
- The Atlanta MSA bucked the nationwide trend of stability, posting a -9.7% drop in prices quarter-over-quarter.
“The overall market stability in this month’s report gives me hope that housing markets are settling after a very turbulent two years,” said Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. “With only a one percent drop in national home prices since January and virtually no change in prices over the last six months, strong evidence suggests the big swings that many market participants are accustomed to could become a thing of the past.
“Although many of the nation’s major markets are experiencing no significant movement in prices, there are still several micro markets that are underperforming the overall market due to high levels of REO saturation. As lien holders continue to process their foreclosures and the flow of REOs continue to come to market, it will be critical for industry participants to ensure they understand the micro economic nature of specific markets.”
Regional Market Overview (Nov. 2010 to Dec. 2011)
Prices Flat as the Great Plains
- National home prices saw little movement across quarterly, six month, and yearly time periods.
- The West region experienced a slight improvement in quarterly price performance with a smaller decline than last month, and remains the weakest of the four regions.
- The Midwest, South and Northeast regions each turned in positive, but weaker quarterly numbers, compared to last month’s report.
The 0.3% increase for U.S. national home prices, after the 0.6% reported last month shows national home price gains continuing to stabilize and soften from those seen over the summer buying season.
Three of the four regions were generally flat, posting price changes of less than one percent quarter-over-quarter. The Midwest was the only region to see prices move above that threshold with a stronger 1.2% quarterly gain.
The West remained the only region to experience a quarterly price decline of -0.8%, showing a modest improvement over last month’s -1.0%. As this improvement comes at the beginning of the winter slow down, it suggests the stubborn quarter-over-quarter and year-over-year declines seen consistently in the hard hit region may be easing.
15 Highest and Lowest Performing Metro Markets (Nov. 2010 to Dec. 2011)
|Highest Performing Major Markets|
|Qtr/QtrRank||Metropolitan Statistical Area||Qtr/Qtr% +/-||Yr/Yr||REO Saturation|
|1||Washington, DC – Arlington, VA – Alexandria, VA||4.8%||2.5%||11.7%|
|2||Hartford, CT – West Hartford, CT – East Hartford, CT||3.6%||-2.2%||5.8%|
|3||Denver, CO – Aurora, CO||3.4%||2.8%||22.2%|
|5||Houston, TX – Baytown, TX – Sugar Land, TX||3.2%||1.6%||26.9%|
|7||Virginia Beach, VA – Norfolk, VA – Newport News, VA||3.0%||-5.3%||19.1%|
|8||Tampa, FL – St. Petersburg, FL – Clearwater, FL||2.9%||-0.6%||23.5%|
|11||Miami, FL – St. Petersburg, FL – Clearwater, FL||2.1%||5.4%||31.9%|
|12||Chicago, IL – Naperville, IL – Joliet, IL||2.0%||-1.8%||29.0%|
|13||Cincinnati, OH – Middletown, OH||1.9%||-2.3%||22.1%|
|15||Cleveland, OH – Elyria, OH – Mentor, OH||1.7%||0.4%||31.2%|
Highest Performing Markets: Holding Fast to Modest Gains
- Quarter-over-quarter gains for the highest performing markets continue to soften.
- Quarterly REO saturation rates hold steady on average, staying below the national rate.
- Four Florida markets maintain positions among the “top 15” list for a second consecutive month.
The highest performing markets continue to weaken quarter-over-quarter, with Washington, D.C. topping the list with 4.8% growth. Even though as a whole, this group hasn’t experienced returns this low since June 2011, each of the 15 markets continued to post quarterly gains. The overall performance of the group has stabilized and tightened, with only 3.1% separating the highest performing market (Washington, D.C.) from the 15th place market (Cleveland).
Four Florida markets (Orlando, Tampa, Jacksonville and Miami) continue to keep their positions among the highest performing markets quarter-over-quarter, rebounding from the steep drops and high levels of foreclosures they experienced over the past two years. Orlando and Miami also show strong year over year performance, topping the list with 5.9% and 5.4% growth respectively. The strong upward price movement for these Florida markets has correlated with a 12% drop in REO saturation over the last year at the state level. The growth in Florida’s MSAs must be described in proper perspective against the state’s precipitous -59.1% drop in prices from peak values in 2006 to today.
The average REO saturation among the top performing 15 markets is steady at 21.6%, trending well against last month’s 22.8% and solidly below the national average of 24.6%. This is a strong contributor to the group’s price stability and performance.
|Lowest Performing Major Markets|
|Qtr/Qtr Rank||Metropolitan Statistical Area||Qtr/Qtr% +/-||Yr/Yr||REO Saturation|
|1||Atlanta, GA – Sandy Springs, GA – Marietta, GA||-9.7%||-18.9%||42.8%|
|2||Seattle, WA – Tacoma, WA – Bellevue, WA||-4.4%||-14.6%||20.2%|
|5||San Diego, CA – Carlsbad, CA – San Marcos, CA||-2.6%||-4.6%||26.8%|
|6||Las Vegas, NV – Paradise, NV||-2.3%||-9.6%||47.1%|
|7||Riverside, CA – San Bernardino, CA – Ontario, CA||-2.0%||-3.7%||42.4%|
|8||Los Angeles, CA – Long Beach, CA – Santa Ana, CA||-1.7%||-3..3%||28.0%|
|9||Detroit, MI – Warren, MI – Livonia, MI||-1.5%||-8.9%||45.2%|
|10||Philadelphia, PA – Camden, NJ – Wilmington, DE||-1.5%||-4.2%||9.2%|
|11||Raleigh, NC – Cary, NC||-0.9%||-3.7%||6.3%|
|12||Sacramento, CA – Arden, CA – Roseville, CA||-0.8%||-7.5%||34.7%|
|13||New Orleans, LA – Metairie, LA – Kenner, LA||-0.7%||-4.0%||20.8%|
|15||Dallas, TX – Fort Worth, TX – Arlington, TX||-0.4%||1.6%||28.7%|
Lowest Performing Markets: Stabilizing, but Fighting REO Saturation
- Atlanta’s quarterly drop is more than double the decline of second place Seattle.
- REO saturation rates remain high but stable for the low performing MSAs, averaging 30.0%.
Home prices in the Atlanta MSA experienced a very sharp quarter-over-quarter decline, with a notably high REO saturation rate of 42.8%. The increase in REO as a percentage of all sales is the result of a decrease in overall transactions and inflow of distressed properties, and is most likely creating the downward pressure on prices.
Aside from Atlanta, the lowest performing markets didn’t see much change in the rates of decline quarter-over-quarter from last month’s report, averaging -2.3% decline this month compared to -1.7% last month. The average REO saturation rate for the group was mostly unchanged from last month at 30.0%.
In contrast to the steep declines in Atlanta, the Dallas MSA posted a very mild quarter-over-quarter decline of -0.4%. This market has performed relatively well in recent past and is the only MSA on this list to boast a positive year-over-year price increase, at 1.6%. Though this gain is modest, it outpaced the rate of year-over-year growth in nine out of 15 markets on this month’s highest performing markets list.
Overall, the moderation and tightness of price decreases and stability of REO saturation for the lowest performing markets do provide for some degree of optimism for the market as a whole as we move into the softer winter buying season.
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 and short sales) 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 Home Data Index™ 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.
About Clear Capital
Clear Capital (www.ClearCapital.com) is the premium provider of data and solutions for the mortgage finance industry. The Company’s products include appraisals, broker price opinions, property condition inspections, value reconciliations, automated valuation models, quality assurance services, and home data indices. Clear Capital’s combination of progressive technology, high caliber in-house staff, and a well-trained network of more than 40,000 field experts sets a new standard for accurate, up-to-date, and well documented valuation data and assessments. The Company’s customers include the largest U.S. banks, investment firms, and other financial organizations. Clear Capital’s home price data can be accessed on the Bloomberg Professional service by typing CLCA <GO>.
The information contained in this report is based on sources that are deemed to be reliable; however no representation or warranty is made as to the accuracy, completeness, or fitness for any particular purpose of any information contained herein. This report is not intended as investment advice, and should not be viewed as any guarantee of value, condition, or other attribute.
Vice President, Marketing