Home Prices Rise for the Quarter, Decreasing Chance of Double Dip
Adding to the good news, Clear Capital found that the saturation of REO (bank-owned) properties continues to drop nationally. In the last quarter just 22.7 percent of homes sold were REO properties, down 19.8 percent from its peak in the first quarter of 2009.
The West shows the strongest signs of reaching stability, with quarterly price changes ranging from minus 1.6 percent to plus 2.7 percent since the start of 2010. Other regions have been more volatile. The range in the South has been from minus 4.2 percent to plus 7.0 percent. The Northeast prices ranged from minus 4.4 percent to plus 6.9 percent.
Cities with the largest quarter-over-quarter gains were Cleveland (29.2 percent) and Memphis (24.2 percent). Charlotte, N.C., survived the entire housing meltdown with the least amount lost in house prices -- 13.1 percent, while the national average was 30 percent since the peak in the housing market in mid-2006. But Charlotte prices are not gaining as much as the other areas. Charlotte was up 2.5 percent year-over-year versus the 8.1 percent national gain.
Compared to July's report, national home prices improved quarter-over-quarter by 7.9 percent and year-over-year by 8.1 percent. That year-over-year improvement is down from 8.8 percent in July's report, so improvement is slowing in house prices.
Housing prices in only four cities continue to be in negative territory year-over-year -- Birmingham, Ala. (-1.9 percent), Baltimore (-2.7 percent), Seattle (-2.7 percent) and Portland, Ore. (-1.7 percent). Even though Baltimore's return is negative year-over-year, it saw the largest quarter-over-quarter improvement in home prices compared to last month's report, rising this month from minus 1.8 percent to plus 2.9 percent in this hard-hit market. This was sufficient to cut yearly losses to 2.7 percent, allowing Baltimore to join Miami, Honolulu, Las Vegas and Riverside, Calif. as the five markets with improving yearly price trends in the hardest-hit markets.
Dr. Alex Villacorta, senior statistician for Clear Capital, sees a light at the end of the tunnel. He said the current housing price trends indicate that "the initial upward momentum created by the tax credit expiration is being sustained."
The key question is: Will it be sustained now that the market has stalled since the end of the tax cut, with both resales and new home sales down to almost zero? The key missing element is jobs. Without jobs improvement, how sustainable can the housing market be?
Lita Epstein has written more than 25 books, including "The 250 Questions Everyone Should Ask About Buying Foreclosures."
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