Data provider Clear Capital today reported that national home prices bucked three months of stability and posted a loss of 1.6 percent quarter-over-quarter, more than a full percentage point in lost value compared to last month’s decrease of 0.4 percent. On a year-over-year basis, the nation lost a more significant 2.6 percent, due in part to market seasonality and an increase of REO sales as a percentage of total home sales, from 24.8 percent at the end of 2011 to 25.4% at the end of January.

Regionally, the Midwest lost 4 percent quarter-over-quarter, leading the nation in quarterly losses for the first time in seven months.   The Midwest saw the most significant change in overall performance of any region. These shorter term declines pulled down its year-over-year returns to -5.2 percent, a marked increase from the softer 3 percent loss reported last month. This drop in values can be partly attributed to a 1.5 percent uptick in REO saturation over the past quarter from 29.5 percent to 31 percent.

“Looking at the latest data through January, home prices remained relatively unchanged with the exception of the Midwest,” said Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. “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.

“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.”

The West, South and Northeast regions were relatively calm, with quarter-over-quarter declines of less than 1 percent.

The Northeast region remained essentially flat over last month’s report with a very mild quarterly loss of 0.7 percent, and year-over-year growth of 0.1 percent. This region has been resilient over time with relative stability in year-over-year and quarterly numbers, but also boasts overall losses of just 22.5 percent since the height of that market’s value in 2006, as compared to the national average of 40.5 percent in losses since the nation’s peak.

The Southern and Western regions posted similar and mild price changes quarter-over-quarter, with 0.9 percent losses each and price decreases of 1.8 percent and 3.5 percent respectively year-over-year.

After consistent weakness throughout 2011, the West reduced its year-over-year losses by nearly a full percent when compared to last month’s results of -4.4 percent. This change can be partly attributed to decrease in REO sales from 38 percent in the first quarter of 2011, to a healthier 31 percent today.

Micro-markets showed high degrees of variability and softening due in part to seasonality and local differences in REO saturation.

Quarter-over-quarter gains for the top performers are narrow and aligned with last month.

Birmingham-Hoover takes the lead on quarterly gains, with 4.3 percent growth, replicating its performance of last month.

Phoenix sits in a very respectable second place with quarterly gains of 3.2%, and advances to 4th place in year-over-year performance.

All of the top performing MSAs avoided quarterly losses this month; however a third of these markets posted mild quarter-over-quarter gains of less than 1%, and only three gained more than 2%. This month’s leaders are showing growth consistent with the past two months, topping out in the mid 4% range.

The Birmingham-Hoover MSA in Alabama took the lead this month with 4.3 percent growth quarter-over-quarter. This market is also showing marked improvement in its year-over-year performance, improving from losses of 11.1 percent year-over-year in last month’s report to just 2.2 percent this month. The drivers for this market’s strong performance include significant gains in its low tier segments (homes worth $63,000 and less), distressed asset sale prices, and a reduction in REO saturation to 32 percent from a high of 40 percent in 2011.

Phoenix is also on the move with 3.2 percent quarterly gains, and a 4.5 percent increase in prices year-over-year. Similar to Birmingham, the Phoenix market has shown signs of a recovery starting with the low tier segment (homes worth $82,000 and less), in price increases for distressed sales, and a deep reduction in REO saturation rate of over 15% since the start of 2011 to a still high, but more reasonable 32 percent. However, Phoenix has experienced severe declines since the market peak of over 61 percent and has a lot of ground to make up.

Double-digit price drops are back for this group, as losses have not been this severe since May of 2011.  Detroit was hit with quarterly price drop of 15.5 percent and an increase in distressed sales.  Dayton shows high volatility, and shifts from the best quarterly performer last month to a drop of 4.5 percenbt this month.

This month’s low performing MSAs showed clear weakness as compared to the same group last month, with all metros posting losses greater than 1.5 percent, and 60 percent with losses of more than 3 percent quarter-over-quarter. On a yearly basis, a full 13 of these 15 markets are showing losses greater than 3 percent, with an average REO saturation rate of 28.5 percent.

The Detroit MSA was pummeled this month with quarter-over-quarter losses of 15.5 percent, and over twice the amount of depreciation than second place Milwaukee. Detroit’s total losses since the peak of the market are a staggering 77 percent, so this month’s results are painful for an already troubled market. Detroit also experienced a 9.7 percent increase in REO sales over last quarter to a staggering 51.8 percent. Although prices are still 10.8 percent above their lowest point in 2009, the domination of REO sales in the Detroit MSA signals values will continue to face an uphill battle.

The Dayton MSA lost a bit of prominence this month, losing 4.5 percent of its value quarter-over-quarter, and moving from one of the highest performing metros last month to the sixth lowest this month. This market also saw a 2 percent jump in its REO saturation up to 32 percent overall, well above the national average. This volatility is not unusual for Dayton, having experienced value swings of more than 5 percent in 10 out of the last 17 quarters. But despite the rapid drop, Dayton is experiencing some strength in its low priced segment of homes (under $36,000), as they have seen an uptick of 0.8 percent quarter-over-quarter, and 6.6 percent year-over-year.

A fascinating new study soon to be released from Clear Capital , a leading real estate data provider, has useful answers to these questions as well as road signs you can use to track your local recovery. It tossed out some of the outdated views of recovery-like the assumption that home values can’t appreciate at a health rate amid significant numbers of foreclosures.

Equipped with a database that measures REO saturation by market, Clear Capital, has studied several of the nation’s most volatile markets, like Miami and Orlando, and analyzed the processes that brought crippled markets back to life.

Here are some of the signs likely to indicate that a price floor has been hit;

• Modest improvement in distressed home sale prices across all price tiers and declining levels of distressed sales as a percentage of total sales . A recovery in the distressed segment, regardless of the magnitude, creates a resistance to downward movement across all price tiers.
• Cash versus financed transactions are a key to investor participation. In Miami, 59 percent of all sales in 2011 were purchased with cash, as were nearly half (48 percent) of Orlando’s sales. This is a significant increase from the national average of 28 percent in November reported by the National Association of Realtors.
• Substantial improvement in values in their lower priced segments - below $70,000.

In an interview with Real Estate Economy Watch, Alex Villacorta, Clear Capital’s director of Research & Analytics, said the increased stability is occurring in the markets they have studied despite a backlog of foreclosures in the of properties in the foreclosure pipeline . RealtyTrac last week rated Florida third longest in the nation for its median foreclosure processing time, at 806 days.

“What’s happening in these markets is taking place without the backlog,” he said. “During most of 2011, Orlando had an average 50 percent REO saturation. Now it’s down to 25 percent and prices are increasing.”

Dr. Villacorta pointed out that to some degree REO sales are more seasonal than fair market sales. A lot of the markets he’s followed are reaching equilibrium at 30 percent of so of REO saturation.

From about 118 days in mid-May, days on market for all homes priced over $500,000 has risen to 198 days as listings linger and demand fades, according to the latest weekly Intittute for Luxury Home Marketing  report, which is prepared by Altos Research.

New listings in the ILHM database are now outpacing sales by about 8 percent .  Total luxury inventory is 30442 homes, significantly higher than the luxury homes listed at the outset of the season in March.

Sellers caught with unsold propreties are contemplating a cold winter,  Nearly half have lowered prices.  Some 40 percent of all luxury proeprties on the market have experienced at least one price reduction.  However, luxury home prices across the ILHM database have stayed relatively stable in recent weeks. This week the median asking price for a property in the luxury category is $1,053,858.

Despites declines in prices through the fourth quarter and January, sellers are expecting nearly demand to be as strong as it was at the beginning of the homebuyer tax run-up in sales a year ago according to February data released today by Move, Inc.

Nationally the median list price for all 2.8 million properties listed on Realtor. com in February remained at $199,000 in February, the same as the previous month and only marginally below (0.50 percent) the median list prices one year ago.  Move, Inc. operates the Realtor.com.

However, average listing prices continued to fall, a sign that home prices are still falling across the country. Those listing prices were essentially unchanged from year ago but they were down 0.5 percent from the previous month, with big declines in Fort Lauderdale, Fla. (-8.6 percent), Honolulu (-5 percent), and Sacramento, Calif. (-2.5 percent).

Overall inventories grew by less than one percent during the month, although they remain about 13 percent above last year’s levels.  For the month of February, listings increased in 107 markets versus January, and they declined or stayed flat in 39.

The median number of days that homes were listed for sale in February, at 164 days, represents a 2.5 percent increase from January and a 29 percent increase from one year ago. The age of the inventory generally increased with listing price.  The median home with a listing price of $200,000 or less has been on the market for 138 days, compared to 342 days for homes that are listed at $1 million or more.

The largest monthly gains in median house price occurred in Miami FL (5.96 percent), Riverside-San Bernardino (5.00 percent), Fort Lauderdale FL (3.39 percent), San Francisco (3.75 percent), and Punta Gorda, FL (3.12 percent).  Although the median listing price in Miami is marginally higher (1.22 percent) than it was a year ago, the median list price in the other four markets continue to be down on a year-to-year basis.  

The largest year-over-year increases in median list price occurred in Middlesex-Somerset NJ (19.63 percent), Fort Myers-Cape Coral FL (14.84 percent), Wichita KS (14.14 percent) Austin-San Marcos TX (12.89 percent), and Buffalo-Niagara Falls NY (11.67 percent).  Prices fell most in Los Angeles-Long Beach CA (-25.57 percent), Reno, NV (-13.03 percent), Santa Barbara-Santa Maria-Lompoc CA (-8.26 percent), and Denver CO (-8.05 percent).

It’s official.  The Fed’s Open Market Committee yesterday affirmed that the housing sector still depressed even though the economic recovery is on a firmer footing and spending and investment continue to expand.

Despite the problems with housing, the Fed decided to keep its current monetary policies unchanged.  It will continue to reinvest principal payments from its securities holdings and purchase $600 billion of longer-term Treasury securities by the end of the second quarter.  It also will maintain the Fed funds rate at 0 to ¼ percent.

With the Treasury program scheduled to run at least through June, its future will be an important subject of discussion at the next FOMC meeting in April. Al;spo on the docket later this year will be a decision about when and how to exit from their easy-money policies by raising interest rates.

For now, at least, yesterday’s decision should encourage mortgage interest rates to remain below five percent.  Last week, Freddie Mac reported rates on a 30 year fixed averaged 4.88 percent with an average 0.7 point. Last year at this time, the 30-year rate averaged 4.95 percent.

Freddie Mac’s economists predict 30-year rates to rise slowly during the year as the economy strengthens, reaching 5.7 percent by January.

Fannie Mae’s latest National Housing Survey found that younger Americans, Hispanics, and African-Americans are generally more positive about owning a home than the general population even though Gen Yers and minorities suffered the steepest decline in homeownership over the past five years.

Fifty-nine percent of Generation Y (ages 18-34) believes buying a home has a lot of potential as an investment, even though this age group has seen their homeownership rate fall forty-four percent when home prices peaked to fewer than forty percent in 2009. The survey, which was conducted from October 15 to December 10, found that Generation Y aligns closely with other generations when considering reasons to buy a home, but assigns a slightly greater value to its impact on their societal status, as a place to raise children, and the potential to build wealth through ownership.

Twelve percent of Generation Y Americans say they live with someone and do not pay for housing and 36 percent are homeowners.  Among Gen Xers, homeownership goes up to 73 percent, 79 percent among Baby Boomers, and to 85 percent among elderly Americans.

More than one-third of Hispanics (34 percent) and African Americans (35 percent) say they will buy a home in the next three years, compared to only one in four (23 percent) of all other Americans.   Yet homeownership among Hispanics has fallen from 50.1 percent in 2007 to 46.8 percent in the fourth quarter of 2010 and among Black households down 48 percent to 44.8 over the same period.  Among all Americans, homeownership has fallen from a high of 69 percent in 2004 to 66.6 percent. according to the Census Bureau. (See Homeownership Tanks to 12 Year Low.)

In the survey, Hispanics assigned greater value than Whites to 14 of the 15 tested reasons to buy a home, including the belief that owning a home is a symbol of success or achievement; that owning a home gives one something to borrow against if needed and owning a home is a good way to build up wealth that can be passed along to my family.

African-Americans also valued homeownership because it allows one to live in a nicer home, is a good retirement investment and owning a home is a good way to build up wealth that can be passed along to one’s family and because it motivates one to become a better citizen and engage in important civic activities, such as voting, volunteering, and contributing to charities

The survey also found that Americans are more confident about the stability of home prices than they were at the beginning of 2010, even though they lack confidence in the strength of the economy:

Seventy-eight percent of respondents believe housing prices will hold steady or increase over the next twelve months, up from 73 percent in January 2010;

But almost two-thirds still believe the economy is on the wrong track, virtually unchanged (61 percent) from the beginning of last year.

“Over the course of the last year, we gained deeper insights into Americans’ confidence in the strength of the housing market and the economic recovery,” said Doug Duncan, Vice President and Chief Economist of Fannie Mae. “More Americans believe that housing prices will remain stable over the next year. We also are seeing encouraging signs in the positive attitudes toward homeownership among younger Americans, despite the severe impact of the housing crisis on Generation Y. But most respondents to our survey continue to lack confidence in the strength of the economic recovery, and they are less optimistic about their ability to buy a home in the years ahead. This sense of uncertainty is weighing on the housing recovery today and reshaping expectations for housing for the future.”

Delinquency rates (on mortgages 30 or more days past due, but not in foreclosure) have been the brightest light in the gloomy foreclosure picture over the past year.  Two new reports confirm that delinquencies are falling to pre-recession levels, a sign that the economy is steadily improving and the end of the foreclosure plague may be in sight.

Yesterday the Mortgage Bankers Association reported that the delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 8.22 percent of all loans outstanding as of the end of the fourth quarter of 2010, a decrease of 91 basis points from the third quarter of 2010, and a decrease of 125 basis points from one year ago. The non-seasonally adjusted delinquency rate decreased 46 basis points to 8.93 percent this quarter from 9.39 percent last quarter.

 ”These latest delinquency numbers represent significant, across the board decreases in mortgage delinquency rates in the US.  Total delinquencies, which exclude loans in the process of foreclosure, are now at their lowest level since the end of 2008.  Mortgages only one payment past due are now at the lowest level since the end of 2007, the very beginning of the recession.  Perhaps most importantly, loans three payments (90 days) or more past due have fallen from an all-time high delinquency rate of 5.02 percent at the end of the first quarter of 2010 to 3.63 percent at the end of the fourth quarter of 2010, a drop of 139 basis points or almost 28% over the course of the year.  Every state but two saw a drop in the 90-plus day delinquency rate and the two increases were negligible,” said Jay Brinkmann, MBA’s chief economist.

 ”While delinquency and foreclosure rates are still well above historical norms, we have clearly turned the corner.  Despite continued high levels of unemployment, the economy did add over 1.2 million private sector jobs during 2010 and, after remaining stubbornly high during the first half of 2010, first time claims for unemployment insurance fell during the second half of the year.  Absent a significant economic reversal, the delinquency picture should continue to improve during 2011,” Brinkmann said.   

The mortgage data and analytics provider Lender Processing Services updated the MBA report by providing journalists a peak at its monthly mortgage report due out February 28.

In January, LPS said the delinquency rate was down 18.8 percent year over year and down 0.8 percent from December.

However, the 2011 foreclosure picture still looks gloomy.  The LPS numbers include an extraordinarily high number of properties over 90 days delinquent, 2,168,000.  These serious delinquencies account for nearly half of LPS’ total delinquency count of 4,719,000.  That indicates continued high levels of foreclosures in the near term.  LPS counts 6,922,000 properties that are 30 or more days delinquent or in foreclosure.

During the second quarter of 2010, the average rent for an apartment in the United States increased by $27 to $1,087, an increase of 2.5 percent according to the national rental site Rentjungle.com, which analyzes over 1 million apartment ads a month.

The national apartment vacancy rate stood at 7.8 percent at the end of June, according to Reis Inc., a New York real-estate research firm. That was down from the 8% vacancy rate during the first quarter, which was the highest vacancy rate in 30 years.   Reis reported rents gained by 0.7 percent during the seasonally strong April-to-June period, the biggest quarterly gain in two years.

“We are seeing some encouraging signs in the overall national rental market,” says Rentjungle.com CEO Jon Pastor. “In the second quarter, rent nationwide was up by 2.5 percent when compared to the first quarter of 2010, which is the continuation of an improvement trend that started in January. Rent in Q4, 2009 was down by approximately 3 percent from the prior quarter, and during Q1 2010, rent was flat. So an increase of 2.5 percent in Q2, 2010 is significant.”

Last week the National MultiHousing Council reported that apartment sales volume was up and markets were tighter for apartments in the second quarter. Its Market Tightness Index, which measures changes in occupancy rates and/or rents, rose from 81 to 83. Fully 69 percent of respondents said markets were tighter (meaning lower vacancies and/or higher rents). This was the sixth straight quarter in which this measure has risen, and is the highest figure since July 2006.

“Demand for apartment residences has substantially increased thanks to modest improvements in the jobs market and the continuing decline in homeownership rates.  While the level of transactions remains subdued compared with the boom years of 2005-2007, activity is gradually growing from the low levels of late 2008-early 2009,” said NMHC Chief Economist Mark Obrinsky.”

“Going forward, the near-term outlook for the apartment industry is likely to be tied to the pace of job growth,” Obrinsky added.  ”Over the longer term, positive demographic trends are likely to keep the demand for apartments growing.”

The brokerage firm CB Richard Ellis agrees.  In March it forecast that US apartment vacancies, which hit an all-time high of 7.4 percent in 2009, will decline to 6.8 percent in 2010 as job losses stabilize and fewer new rental homes are added to the market. The nation’s vacancy rate will fall to, the property broker forecasts

RentJungle reported that two bedroom apartments saw the largest percentage increase in Q2, up 2% to $1,222 per month. One bedroom apartments were also in demand, up 1% to $970 per month.

“The rental market appears to have bottomed out in the last quarter of 2009,” said Rent Jungle co-founder Rick Ferris. “This is the first quarter that we have seen significant strength in the two bedroom market, indicating that larger apartments may be coming back in demand as the economy turns. It will be interesting to see if decreases in overall consumer confidence that were reported in June reverse this strong trend heading into the remainder of the summer.”

Across all apartment sizes, San Diego, San Jose, Norfolk, Providence, Hartford and New Haven all saw rent increases above 4 percent in the second quarter. The majority of cities realized increases in the 1 to 3 percent range. Tampa, Tulsa, Hollywood and Indianapolis however, all saw decreases in excess of 1 percent.

Existing home sales will climb by only 2.9 percent to 5.31 million units and new sales by 9.4 percent to 409,000 units said PMI in its July Housing and Mortgage Market Review.  Previously PMI forecast existing sales would be up 6.1 percent  ro 5.47 million units this year and new homes 16.6 percent to 436,000 units. 

“The expiration of the second tax credit has hit housing activity hard, after having drawn sales forward into March and April. Moreover, all of the near-term leading indicators of housing activity suggest no pickup in coming months (and perhaps even additional declines). Directionally, however, this should not have been a surprise to anyone - although the magnitude of the falloff is larger than we expected,” said PMI.

A rebound is possible in the balance of the year, with continued job growth, record low mortgage rates, and improving demographics.

But PMI now doesn’t see a faster sales pace until 2011.  A stronger economy and improving demographics, will resulting in a rise in existing sales of 8.6 percent (to 5.76 million units) and new sales of 48.7 percent (to 608,000 units).

Prices will change little over the balance of this year before climbing modestly by nearly 2.0 percent next year. Short-term interest rates will also stay unchanged for the rest of 2010 as the Fed keeps monetary policy unchanged. By the end of the year, PMI projects yields on 10-year Treasury notes to climb only to around 3.60 percent. In 2011, however, if the economy rebounds as we expect, then the Fed will begin to tighten monetary policy in order to reduce the chances that the liquidity it has added in recent years will lead to inflation and/or asset bubbles. A hike in the federal funds rate of 150-200 basis points is likely over the first 12 months of tightening.

Sales of foreclosed properties fell by one third in the first quarter from a year ago and 14 percent from the last quarter of 2009, according to a new report released today by RealtyTrac, the leading online marketplace for foreclosure properties.

A total of 232,959 U.S. properties in some stage of foreclosure sold in the first quarter, a decrease of 14 percent from the previous quarter and down 33 percent from the peak during the first quarter of 2009, when sales of foreclosure homes accounted for 37 percent of all residential sales.

Though there were fewer foreclosures, their impact on prices in local markets may have been greater than previously thought.  Foreclosures were discounted nearly 27 percent below the average sales prices of non-foreclosed homes.  Yet nationally, prices were stable during the quarter.   The National Association of Realtors reported the national median existing-home price for all housing types was $170,700 in March, up 0.4 percent from March 2009. Distressed homes were typically sold at a 15 percent discount.

The average sales prices on properties in some stage of foreclosure decreased 23 percent from 2006 to 2009 while the average discounts on foreclosure purchases steadily increased from 21 percent in 2006 to 27 percent in the first quarter of 2010. Discounts on REOs are larger than discounts on pre-foreclosures, although discounts on pre-foreclosures appear to be trending higher as short sales become more common, RealtyTrac said.

“First time homebuyers and investors continue to buy foreclosure properties in large numbers, and at substantial discounts,” said James J. Saccacio, chief executive officer of RealtyTrac. “As lenders have begun repossessing homes at record levels over the first half of 2010, it will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deterioration.”

The states with the three highest average foreclosure discounts were Ohio, Kentucky and Illinois.  There the average sales price of properties that sold while in some stage of foreclosure in the first quarter was 39 percent below the average sales price of properties not in the foreclosure process.

The average overall foreclosure discount was at least 35 percent in California, Tennessee, Pennsylvania, DC and New Jersey.

The biggest discount on bank-owned properties was in New York, where the average sales price for REOs was 52 percent below the average sales price for properties not in foreclosure. The biggest discount on pre-foreclosure properties was in Rhode Island.