(TRUCKEE, CA) -- According to Clear Capital's latest Home Data Index (HDI) Market Report, Detroit's 14.1% quarterly price gain tops all major U.S. markets, surpassing five-month leader Cleveland (12.8%); while National quarterly home prices post modest 1.4% gain. This month's report features data compiled through Nov. 27, 2009.
"The modest and improving yearly changes we're seeing at the National and Regional levels show that many areas have sustained stable price levels for nearly all of 2009 after the dramatic fall off in prices in the preceding three years," said Dr. Alex Villacorta, Senior Statistician, Clear Capital. "Yet, the continued rolling quarter declines experienced over the past two months have helped confirm that seasonal influences have returned."
"Even with a potential increase in REO saturation rates, many markets are still showing strong evidence of stabilizing, indicating signs of a price bottom," added Villacorta. "With the passing of the tax credit helping to strengthen the momentum through the winter, many buyers may find that this season is a good time to take advantage of record low prices."
The HDI Market Report offers the real estate industry a near real-time look at pricing conditions not only at the national and metropolitan level, but within local markets.
The HDI Report further states:
National / Four Region Overview: National quarterly price gains are narrowed to a modest 1.4 percent; with the Midwest (2.3%), West (1.5%), South (1.0%) and Northeast (0.9%) all posting modest gains.
Metropolitan Statistical Area (MSA) drilldown: The highest performing major markets continued to experience quarterly home price gains, further minimizing yearly losses. Lake Erie cities of Detroit, Mich. (14.1%), and Cleveland, Ohio (12.8%), top this month's highest performing major markets. Softening seasonal home prices have returned most of the lowest performing major markets to negative quarterly results.
Micro Market Analysis: Home price gains of 13.4 percent over the last two rolling quarters indicate prices in the Atlanta, Ga. MSA may have bottomed out and are beginning to recover.
Seasonal softening in the housing market this fall continues, placing the nation's quarterly gains at a modest 1.4 percent. That's less than half the 3.7 percent returned last month, and nearly five percentage points less than the 6.3 percent gains reported for September. All four regions continued to show quarterly gains this month, with the spread in gains narrowing again, reflecting more consistent price changes among the regions. Particularly encouraging is the West region which continues to see moderate price gains among its largest and highly REO-influenced markets.
While the seasonal cycles are still eclipsed by the magnitude of declines since the market peaked in 2006, the return to seasonality this winter could expose the dynamics of REO inventories. The traditionally slower winter season is associated with a reduced number of home sales and an increase in marketing times. REO properties, on the other hand, are typically priced to sell in a given timeframe regardless of season.
The net result of combining the two dynamics of seasonal downturn and REO property liquidations is likely increased REO saturation rates in the winter months. It's important to note that these increased REO saturation rates should not necessarily be interpreted as an increase in REO volume. Declining REO saturation rates during the winter are more difficult to achieve and any such decrease would be seen as a very good sign that demand has returned to the marketplace. Even modest increase in REO saturation rates this winter, more than likely would not signal an end of the recent recovery.
Illustrating what could be a good sign of things to come this winter, national REO saturation rates did continue a downward trend this month, dropping another 1.1 percentage points to 26.9 percent.
Metro Markets (Oct. 29, 2008 - Nov. 27, 2009)
All of the highest performing major markets continue to experience quarterly home price gains, further eroding yearly losses. Thirteen of the fifteen markets saw improvements in their yearly gains over last month. The magnitude of the quarterly gains demonstrates the dire state of the market a year ago, while the improvements in the yearly returns indicate markets are stabilizing.
A Lake Erie connection was made atop this month's list of highest performing major markets. Detroit, which narrowly missed the highest performing markets list last month, ended Cleveland's five-month reign as the highest performing major market by posting a 14.1 percent quarterly gain. Detroit's strong quarterly price gain reduced its yearly price decline to -4.4 percent. One of the hardest hit areas in the country in regards to home price declines, Detroit's large percentage home price gains this rolling quarter are reflective of the low prices still present in the area. When compared to the current median sale price of $63,000, Detroit's 14.1% quarterly gain translates to an approximately $7,800 increase over last quarter's median value.
Phoenix, Ariz., a longtime leader of the lowest performing major markets, moved into the highest performing list this month with solid quarterly gains (4.4%) offsetting its list-leading 23.8 percent loss for the year. Northern California's Bay Area is well represented in this month's highest performing list. Both the San Francisco (6.1%) and San Jose (4.5%) MSAs turned in solid gains, putting them within striking distance of eliminating yearly losses.
REO saturation rates decreased from last month in twelve of fifteen markets by an average 1.8 percent (New Haven, Conn.; Pittsburgh, Pa.; and Cleveland experienced minor REO saturation increases of 0.8, 0.3 and 0.1 percent, respectively). The continued general decrease in REO saturation across this list is a positive sign as we prepare to enter the winter months that, as stated previously, traditionally experience a rise in REO saturation.
The softening seasonal home prices have returned most of the major markets on the lowest performing list to negative quarterly results. These declines remain generally minor, however (less than 3.8%). Las Vegas, Nev. (-0.1%) was the only MSA on this list to see its quarterly price change improve from last month (-1.8%), enough to push it to tenth place this month from its top position on this list last month.
While quarterly price changes continue to show slight dips into negative territory, annual price changes are improving. Every MSA except for Rochester, N.Y. saw yearly price improvements in this month's report. This reflects the seasonal influence on the quarterly numbers, while the yearly numbers reflect a solid improvement over last year.
Fresno, Calif. has improved since it last appeared on this list three months ago. While still experiencing high REO activity (42.4%), Fresno's -15.6 percent yearly price change is a substantial improvement over the -25.9 percent yearly price change and 48.2 percent REO saturation posted three months ago.
Houston, Texas; Raleigh, N.C.; and Las Vegas, Nev. saw the largest declines in REO saturation, 4.7, 3.5 and 3.3 percent, respectively. This late in the buying season, it's a positive sign to see the lowest performing major markets continue to see declines in REO saturation, reduced yearly losses and significantly improved quarterly gains compared to one year ago.
Micro Markets (Oct. 29, 2008 - Nov. 27, 2009)
Home prices in the Atlanta, Ga. micro markets have returned to levels not seen in eleven years. Furthermore, if inflation is taken into account, current home prices would fall even farther below 1998's market, placing today's prices at a level not seen since 1994. While this picture is grim if considered by itself, it serves to highlight how discounted much of the Atlanta MSA has become. It also adds perspective into the 13.4 percent price gains experienced over the last two rolling quarters--a substantial number given the average quarterly gain over the past ten years was 1.7 percent.
While home price changes in Fulton County have generally outpaced DeKalb County over the past year (7.7% vs. -4.5%), the unincorporated area of DeKalb County just north of the county seat of Decatur (ZIP 30033) has demonstrated remarkable home price stability.
Decatur, the best performing ZIP code among Atlanta's micro markets, has experienced an 8.7 percent price gain this past year, and only a modest -3.5 percent change since home prices peaked in 2006. Decatur has benefited from low REO volatility, its proximity to Emory University, and immediate access to downtown Atlanta.
At the other end of the price performance spectrum lies Rex (ZIP 30273), an unincorporated part of Clayton County southeast of downtown Atlanta. Rex has an REO saturation rate twice as high as that of the greater Atlanta area, resulting in price changes of -38.9 percent over the past year. This annual price drop has added to Rex's decline, which has now returned a -65.0 percent price change since this market peaked in 2006.