July 8, 2011 (Jeff Alan)
Clear Capital expects home prices to drop another 2.4 percent in the second half of 2011, despite a 0.9 percent price increase in the second quarter, as a lack of consumer demand needed to produce sustained price increases has yet to materialize. Clear Capital also says prices have begun to level off and are no longer exhibiting the same volatility that had been experienced since the beginning of the housing downturn.
“At the mid-point of the year, it’s promising to see the overall market shake off the string of declines observed since late last year, especially in light of significant challenges for the industry,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital. “However, we have yet to see the burst in consumer demand to avoid posting a net loss in national prices for the year.
Overall home prices for the first half of 2011 have dropped 3.2 percent as the first quarter price drop of 4.1 percent overshadowed the second quarter’s price gains. The Midwest was hit particularly hard with Detroit experiencing a price decrease of nearly 20 percent in the first half of 2011.
The Real Estate Owned (REO) saturation rate declined to 31.4 percent at the end of the second quarter compared to 33.1 percent at the end of the first quarter.
The four major regions, the West, Midwest, Northeast, and South, are all expected to remain in negative territory for the second half of the year with home prices in some metropolitan areas expected to show more stability.
Ten of the highest performing metropolitan areas in the first half of 2011 are forecasted to improve their performance with Washington D.C, New York, Orlando, Dallas, and San Francisco likely to turn modest gains.
California, which has been one of the hardest hit states in the housing downturn, shows potential for improvement with the second half forecast expecting a decline of less than two percent.
Metropolitan areas expected to show worsening market conditions are Virginia Beach, Cleveland, Minneapolis, Chicago, and Fresno, CA.
Clear Capital says that although price movements in the first half of the year were largely negative, the moderation of the projected price changes generally reflects a flattening market.
Tags: Clear Capital, housing prices, price declines, flattening market, stabilize, REO, saturation rate, consumer demand, metropolitan areas