The following article released by Inman news was sobering, but adds credence to my personal opinion that we aren’t quite done with declining home prices. When you have 1/3 of all home sales attributed to bank-owned homes – that simply drags values in local markets down to a point where many potential sellers will go into hibernation…and the only sellers you have are those that HAVE to move. Many of those folks are:
– In short-sale positions and selling for less than market value,
– Homes that are in family trusts and after a family member passes away are sold for less than market value,
– Those who own homes outright and don’t mind selling for less than market value if they can get a better deal in a higher price range,
– Then people that simply have to move because of family decisions who don’t mind coming to the closing table with thousands of dollars in hand just to move out of their house.
At the bottom of the list, there are the small percentage of folks that have built up enough equity to have taken the brunt of the market declines and and recognize that they can take advantage of the current market in their next purchase.
All of this leads to a market that is reaching stabilization and less-severe declines…but still not one that I envision many gains in (except for in extremely desirable neighborhoods).
That said – here’s the article!:
U.S. home prices rose slightly in the second quarter, but ultimately fell in the first half of the year and are likely to fall further in the second half, according to a report from data and valuation firm Clear Capital, released today.
Prices are expected to fall another 2.4 percent by year-end. Since June 2010, home prices have fallen 8 percent overall, the report said.
Clear Capital attributed the price declines to downward pressure from high unemployment and a high share of foreclosure sales. Bank-owned properties (REOs) accounted for 31.4 percent of overall sales at the end of the second quarter, a slight dip from 33.1 percent at the end of the first quarter.
“While varying according to each local market, it is unlikely national home prices have reached a true and sustainable bottom,” the report said.
Nonetheless, “it is clear prices have begun to level off and are not exhibiting as much volatility as we’ve seen since the downturn began,” said Alex Villacorta, director of research and analytics at Clear Capital, in a statement.
The Midwest and the West are expected to see the biggest price drops in the second half of the year: 4.1 percent and 4 percent, respectively. The Northeast and the South will stay relatively flat with declines of 0.8 percent and 1.3 percent, respectively.
Of 50 major metro areas, only five are forecast to see home-price gains in the second half of the year: Washington, D.C.; New York; Orlando; Dallas; and San Francisco. Among the 15 markets expected to perform best in the second half of the year, 11 are expected to see either gains or smaller rates of decline.
The Virginia Beach-Norfolk-Newport News, Va., metro area is expected to see the biggest price drop, down 8.6 percent, among the 15 lowest-performing major markets. Clear Capital predicts nine out of the 15 will either maintain or slow their price declines compared to the first half of 2011.