May 4th, 2011 – April officially marked the first month of the double dip with national home prices 0.7 percent below the prior low recorded in March 2009.
Clear Capital’s report shows prices have fallen 11.5 percent over the previous nine-month period. A rate of decline this rapid has not been seen since 2008.
All the major metropolitan statistical areas tracked in Clear Capital’s report showed quarter-over-quarter price declines. The company says it’s a “sign of the continued volatility and fragility of home prices.”
At the regional level, home prices in the West, Northeast, and South regions have all crossed into double dip territory to record their lowest prices since the downturn began.
While spring typically brings with it a resurgence in home sales – and home prices follow – markets have entered uncharted territory since this spring home buying season will be the first since 2008 without any tax credit incentive.
“A note of caution to those looking for a strong end to 2011: The last time no incentives were in place and distressed inventories were this high, home prices fell sharply,” Clear Capital said in its report.
The company’s home price report last month noted the subtle but rather ominous trend that distressed sales activity in the West, as a percentage of total sales, had climbed after a prolonged 18-month period of general improvements, and in turn, home prices in the western part of the country hit the double-dip mark in March.
Nationally, Clear Capital says a similar trend has formed with REO saturation climbing to a current level of 34.5 percent after it declined to near 20 percent in mid-2010. Strikingly similar, the company says, 2008 saw REO saturation grow from near 20 percent early in the year to 32 percent by the end of 2008.
Looking at home price trends during these same two periods ties together similarities, Clear Capital explained, with a 15.6 percent price decline for the 2008 timeframe compared to the 11.5 percent decline for the mid-2010 through April 2011 period.
“This comparison leads to concern over home price declines through the rest of 2011,” Clear Capital said in its report, noting that the trends of 2008 were quickly reversed with the introduction of stimulus measures.
The housing market still faces many challenges that will only be solved through increased buying activity or a reduction in the distressed segment ― neither of which is assured in 2011.
