Year-over-year numbers in Clear Capital's latest showed weaker performance for the nation and the regions than expected but nationally Dr. Alex Villacorta, Clear Capital's Director of Research and Analytics, forecasts the rest of 2012 will show mild increases building up to a stronger 1.2 percent increase by year end.
"With the exception of the Midwest, positive growth in rolling quarter-over-quarter prices is an encouraging sign that markets are rebounding from the winter slow down earlier than usual," said Villacorta. "Even with the relatively modest declines seen over the last few months, markets have continued to show signs of bottoming out. The projections we made at the beginning of the year are playing out and we expect to see the nation gain just over 1% through the year's end.
The nation held fast over the most recent quarter, and for the fifth time in six months, saw price changes of less than 1 percent. While the US lost -0.2% quarter-over-quarter, this decline is milder than last month's decline of -0.6 percent. This positive trend may be attributed to the beginning of spring after a very mild winter, resulting in the start of an early buying season.
However, the embattled Midwest region is a different story. The region, hit hard over the past three months, continued sliding this month losing -2.4 percent, and was the only region to post losses in the quarter or mark any quarterly price movement more than 2 percent. This result shows how the stability seen by the rest of the nation has yet to embrace the region.
For the second month in a row there have been increases in REO saturation for the nation and the regions, helping to confirm speculation the Attorneys General settlement has empowered the affected servicers to become more aggressive in moving their REO backlog onto the housing market.
In March, the national REO rate went up 1.2 points since last month and 1.8 points over the past quarter to hit 27 percent, pointing to an acceleration of REO sales. The Midwest contributed the most to the increase, jumping 3.8 points over the quarter to 34.3 percent, with the other regions all seeing softer increases.
"We are continuing to see, overall short term home value strength against the rising REO saturation." Villacorta added. "This is an indication of market stability, and bodes well for the continued growth we're expecting over the rest of the year."
Of particular interest this month is how these changes in REO saturation are affecting prices. In the past, there has been a consistent inverse relationship between changes in REO saturation and prices, but not this month. The nation and all regions saw increases in REO saturation over the most recent quarter, but changes in prices over the same period were positive for the West, Northeast, and South, describing an unexpected direct relationship. The US and Midwest's changes in prices over the same period were downward, describing the expected inverse relationship.
The geographies with direct relationships show a pricing resilience to REO saturation that has not been seen in previous HDI analysis. It could be powered by improvement in the jobs numbers recently, rapidly increasing investor activity in certain regions, and the general increase in consumer confidence
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