Market Gaining Steam
Posted by Don Dutton at Jun. 12, 2012
Clear Capital: Prices See First Quarterly and Yearly Gain Since August '10
For the first time since August 2010, home prices rose on both a quarterly and yearly basis, according to the May 2012 Home Data Index (HDI) report released by Clear Capital.
Quarter-over-quarter, prices appreciated 0.4 percent, the first quarterly increase since November 2011. Year-over-year, prices rose by 0.1 percent, according to the index. The increases were attributed to stronger regional growth in the West, Northeast, and South, as well as a rise in REO-only prices.
“While gains in national home prices over the quarter and year were minimal in May, there are encouraging trends continuing to play out and gaining momentum beneath the surface,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital. “Strength in REO-only price trends as well as some early indications of price gains spreading from low tier sectors to the mid, and higher-priced homes is helping confirm that the country continues to make progress on its recovery, and we are expecting to see improvements extend over the next several months.”
Among the four regions, the growth was greatest in the West. Leading all regions with a 2.7 percent price increase, the West also gained 1.9 percent on a yearly basis.
According to Clear Capital, the West has shifted from seeing demand for lower-priced homes priced $140,000 or less, to growth for mid and top tier homes, with the top tier segment at a pricing point of $347,000 or higher.
The South saw home values increase by 1.2 percent on a quarterly basis, doubling from the previous month’s gain of 0.6 percent, while growing 0.9 percent yearly. The Northeast shared the same average with the national level at 0.4 percent quarter-over-quarter, and increased 1.6 percent year-over-year.
The Midwest, on the other hand, moved in the opposite direction, declining by 2 percent quarter-over-quarter, and declining even more on a yearly basis at 3.1 percent.
On a national level, REO-only prices grew by 8.1 percent over the last year on a median price-per-square-foot basis. Among the four regions, the Midwest was the only one to see REO-only prices decline on a yearly basis.
Clear Capital explained that gains in REO prices are helping market prices, but the extent to which prices are influenced depends on REO saturation, or the portion of REO sales relative to total sales. In the Northeast, REO saturation is only 10 percent, and in this region, REO prices have gained more than 20 percent in the Northeast. Overall, the yearly gain was only 1.6 percent due to low REO saturation.
The metro areas with the highest increase in prices on a quarterly basis were Phoenix (9.4 percent); Seattle (9 percent); Dayton, Ohio (8.3 percent); Washington D.C. (5.1 percent); and San Jose (5.1 perent).
The metro areas with the smallest gains on a quarterly basis were Detroit (-10.4 percent), Houston (-5.9 percent), Milwaukee (-5.2 percent), Memphis (-4.3 percent), and Honolulu (-3.8 percent).
Clear Capital is a provider of data and solutions for real estate asset valuation and risk assessment for large financial services companies.