February 16, 2012 (Jeff Alan)

The decline in home prices picked up steam again in the current rolling quarter ending in January, declining 1.6 percent after declining by a modest 0.4 percent the previous month according to Clear Capital’s Home Data Index (HDI).

Prices at the end of January were 2.6 percent lower than they were at the end of January last year, a jump up from the 2.1 percent year-over-year price decline posted at the end of December. It was the 17th consecutive month that annual home prices have declined.

The bulk of the decline originated out of the Midwest region where prices declined 4.0 percent in the latest quarter while the rest of the regions saw declines of less than one percent. Forty percent of the worst performing markets came from the Midwest region.

Home prices in the West and in the South regions declined 0.9 percent, while the Northeast posted the smallest decline of 0.7 percent.

Three of the four regions posted year-over-year declines with the Midwest also suffering the largest decline (-5.2%), followed by the West (-3.5%), and the South (-1.8%), with the Northeast (0.1%) being the only region to post an increase.

Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital said, “Looking at the latest data through January, home prices remained relatively unchanged with the exception of the Midwest. Although prices at the national level continue to slide due to pressure from the Midwest, the lower priced segments of several specific markets are bucking the trend and seeing appreciation, suggesting that recoveries could be occurring from the bottom up.

The top performing markets over the latest quarter were Birmingham (+4.3%), Phoenix (+3.2%), Washington D.C. (+2.1%), Denver (+1.9%), and Orlando (+1.8%).

Only 10 markets showed gains of over one percent and only three markets had price increases of over two percent. Phoenix, along with Las Vegas, which had long been the poster child of the housing crisis has actually seen prices rise 4.5 percent year-over-year.

The worst performing markets over the latest quarter were Detroit (-15.5%), Milwaukee (-7.7%), Atlanta (-7.2%), Memphis (-6.8%), and Philadelphia (-4.7%). Home prices in Detroit have declined 77 percent since their market peak.

Thirteen of the top 15 worst performing markets had quarterly losses exceeding three percent with an average REO saturation of 28.5 percent, 12 percent higher than the national REO saturation rate.

REO sales as a percentage of total home sales increased from 24.8 percent at the end of December to 25.4 percent at the end of January.

“When we look at the strength in the bottom tier of prices, the volatility within the metro markets, the rapid changes in direction with certain regions, and relative stability in others, these factors underscore the economic and market fragility that remains a dark cloud over housing prices,” added Villacorta.

Tags: Clear Capital, housing prices, price declines, REO, saturation rate, consumer demand, metropolitan areas

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