Report: Housing market in West nears double-dip
TRUCKEE
April 7, 2011 5:06am
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• Prices dropped 4.3 percent in Q1
• ‘Widespread fear of a collective fall in market prices is
overstated’
Home prices in the just-concluded first quarter fell nationwide, but homes
in the West had a near double-dip, according to a report Thursday from Clear
Capital Inc. of Truckee.
Nationally, prices fell 1.3 percent but in the West plummeted 4.3 percent
from a year earlier and has reached double dip territory, the report says.
"The latest data through March supports our view that many markets are
continuing to see relief from the significant price declines we observed
through January," says Alex Villacorta, director of research and analytics
at Clear Capital. "While some markets are already in double dip territory,
specifically in the West, widespread fear of a collective fall in market
prices is overstated."
"Looking deeper at the disparity between the West and the other regions, we
find that the rate of change in REO saturation continues to serve as a
leading indicator of home prices," says Mr. Villacorta. "For example, out of
all the regions, only the West showed acceleration in its REO saturation
from the previous quarter."
Nationally, the rapid declines observed at the end of 2010 have essentially
halted, according to Clear Capital. Data through March 2011 in the Midwest,
South and Northeast regions indicates home prices have managed to find a
bottom in the midst of ongoing foreclosure pressures and the traditionally
slow winter season.
Home prices in the Northeast, Midwest and South regions, as well as the
nation as a whole have reset at a level more aligned with the first tax
credit correction, rather than the market bottom experienced early in 2009,
the report says. In the absence of tax credit incentives, the most recent
gains are largely based on improvements in REO saturation and unemployment
fundamentals, helping this latest price stabilization.
Concern over the continued fall in prices in many Western markets is founded
, says Clear Capital. This region continues to struggle and has experienced
an extended decline in home values since reaching its most recent high mark
in the summer of 2010. The consistency of these declines in the West not
only has pushed prices to a post peak low (double dip), but show no sign of
stabilizing, the report says.
Looking ahead, should the traditional spring and summer buying seasons prove
substantial, home prices at the national level could reach positive
quarterly gains before the end of 2011. Distressed activity, however,
remains high and should void gains in the West.
The West region broke through its prior 2009 low point, becoming the first
region to double dip. This places home prices in the West at their lowest
point since 2001 and reflects the continuing price declines among most key
markets in the region, the report says.
“This underperformance in home prices reflects the extent distressed
activity plays in western markets. Recently, distressed activity as a
proportion of total sales has climbed nearly 10 percent since the second
quarter of 2010, and now stands at 40.8 percent of sales,” it says.