HDI Reports Late-Summer Softening of Home Price Gains, Reduced REO Saturation Rates

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(News Source: Clear Capital)
 
(TRUCKEE, CA) -- Clear Capital today released its Home Data Index™ (HDI) Market Report which is compiled through September 25, 2009.

Key report highlights include:

• National quarterly price gains soften to 6.3 percent, and the national yearly decline returns to the single digit numbers (-9.9%) for the first time since summer of 2007.

• The West region continues its price improvement, posting 2.9 percent quarterly and 1.6 percent six-month gains.

• The national real estate owned (REO) saturation rate (percentage of REOs sold to all properties sold in the last rolling quarter) dropped to 28.6 percent.

• Metropolitan Statistical Area (MSA) drilldown:  Riverside, CA and Orlando, FL return first positive quarterly price gains since mid-2006, (0.5% and 1.2%, respectively).

"As anticipated, the strong gains we've been experiencing this summer are showing signs of softening," said Kevin Marshall, Clear Capital President. "But growth remains sufficiently strong--providing hope as we head into a winter that will test the strength of the recovery."

"Prices remain low, driving investor activity into the non-REO marketplace across the nation. This is a good sign that the recovery is reaching beyond the distressed segment," added Marshall. "Historically, investors move in at the bottom which creates confidence for the bargain hunting fair-market buyers to enter the market as well."

 

National/Four Region Market Overview (August 27, 2008 - September 25, 2009)



 

Quarterly price gains softened from last month, but remain substantial across all four regions. The national year-over-year price decline was trimmed by 2.2 percent from last month, producing the first single digit loss (-9.9%) for the nation since the summer of 2007.

Generally seen as an improvement, the national REO saturation rate declined 1.5 percentage points to 28.6% from last month's quarterly value of 30.1 percent.  With the reported decline being 3.2 percent last month, this month's 1.5 point decline represents continued improvement, but at a slowing rate.  While the rate of improvement may be slowing, the impact of declining saturation rates has been significant, with the current level being 12.3 percentage points lower than the rates of last winter.

Despite the positive signs, a year-over-year price decline reminiscent of 2007 and marked reductions of the REO Saturation rate, we're still far from the 10 percent REO saturation rates seen in 2007.  Amid these conditions, it's notable that the recent price gains have occurred alongside a record number of REO sales, indicating that the reductions in REO Saturation has been caused by non-REO sale volumes outpacing the growth in REO sales.  This demand for the non-REO segment is important if a broad recovery is to be sustained.

The quarterly gains in the Midwest (13.3%) have brought its year-over-year loss (-9.1%) close to that of the South (-8.0%) and Northeast (-8.2%), leaving the West with the lowest quarterly gains (2.9%) and largest yearly losses (-16.2%) for the group. 

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