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Jun 12

Smaller home price drops encouraging

Some optimism despite continuing home price declines

Wednesday, June 8th, 2011, 11:01 pm

Clear Capital’s May Home Data Index found prices fell 2.3% last month compared to the three months prior. Prices fell 7.6% compared to the year earlier to the same level seen in 2000. While the news sounds dire, Clear Capital retained optimism about the prospect of price stabilization.

The softening of price declines suggests prices are stabilizing as the typically stronger summer buying season approaches,” Clear Capital said. “Based on historical patterns, the non-REO segment increases its share of total sales volume in the spring and summer months.”

Prices dropped the most in the Midwest during May, down 4.9% compared to the previous three months, followed by the South with a 1.8% drop, the West, which was down 1.6%, and a 1% drop in the Northeast.

Bank-owned median PRICES UP

The real estate valuation firm anticipates an increase of REO sales (bank-owned homes). According to the firm’s data, the median price for a distressed property increased 5% in the fourth quarter.

This marks the longest gain in median price for REOs since the market correction began in 2006,” Clear Capital said. “This is a positive signal at minimum. It indicates buyers’ appetite for higher-end REO.”

This could lead to an increase in sales volume this season.

More: Softer home price declines signal improvement: Clear Capital

 

 

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