Without distressed sales, prices would have fallen only 0.9 percent in 2011, an indication of the impact of distressed sales on home prices in 2011 according to CoreLogic, a leading provider of information, analytics and business services.

In December, home prices decreased 1.4 percent on a month-over-month but excluding distressed sales, prices would have posted their posted its first month-over-month gain since July 2011, rising 0.2 percent. The December drop in home prices follows a decline of 4.3 percent in November 2011 compared to November 2010. Excluding distressed sales, year-over-year prices declined by 2 percent in November 2011 compared to November 2010. Distressed sales include short sales and real estate owned (REO) transactions.

“While overall prices declined by almost 5 percent in 2011, non-distressed prices showed only a small decrease. Until distressed sales in the market recede, we will see continued downward pressure on prices,” said Mark Fleming, chief economist for CoreLogic.

Highlights as of December 2011

• Including distressed sales, the five states with the highest appreciation were: Montana (+4.4 percent), Vermont (+4.0 percent), South Dakota (+3.1 percent), Nebraska (+2.5 percent) and New York (+1.7 percent).
• Including distressed sales, the five states with the greatest depreciation were: Illinois (-11.3 percent), Nevada (-10.6 percent), Georgia (-8.3 percent), Ohio (-7.7 percent), and Minnesota (-7.5 percent).
• Excluding distressed sales, the five states with the highest appreciation were: Montana (+7.7 percent), South Dakota (+3.5 percent), Indiana (+3.3 percent), Alaska (+3.1 percent), and Massachusetts (+2.9 percent).
• Excluding distressed sales, the five states with the greatest depreciation were: Nevada (-9.7 percent), Minnesota (-5.2 percent), Arizona (-4.9 percent), Delaware (-4.2 percent) and Michigan (-3.5 percent).
• Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to December 2011) was -33.7 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -24.0 percent.
• The five states with the largest peak-to-current declines including distressed transactions are Nevada (-60.0 percent), Arizona (-51.9 percent), Florida (-50 percent), Michigan (-43.7 percent), and California (-43.5 percent).
• Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 81 are showing year-over-year declines in December, one more than in November.

The current list of Top 10 Turnaround Towns, developed using year-over-year comparative data from the fourth quarters of 2011 and 2010, begins with three of the nation’s top foreclosure markets that also achieved significant year-over-year median list price appreciation: Miami, FL, Phoenix, AZ, and Orlando, FL. They were followed by Fort Myers-Cape Coral, FL, which fell from third to fourth on the Realtor.com Top 10 Turnaround Town list in one quarter, and Sarasota-Bradenton, FL which rose from sixth to fifth. Ranking sixth was Boise City, ID, the only Rocky Mountain market to make the list. Four Florida markets rounded out the list including: Naples, Fort Lauderdale, Lakeland-Winter Haven and Punta Gorda.

The market rankings are based on year-over-year median price appreciation, reduction in year-over-year median age of inventory, and inventory reduction levels as observed on Realtor.com, as well as unemployment rates on a year-over-year basis. The Realtor.com Top 10 Turnaround Report is based on an algorithm that combines those four key measures with searches for properties on Realtor.com and the ratio of searches to listings in order to equalize markets by size. The resulting report reflects price changes that have taken place and gives weight to supply and demand dynamics that create continued progress towards growth and stability in future months.

The Realtor.com Top 10 Turnaround Towns, according to Fourth Quarter 2011 data are:

Miami, FL is leading the nation on the turnaround path. According to the Miami Association of Realtors, sales of existing single-family homes in the Miami Metropolitan Statistical Area (MSA) jumped 51 percent in the third quarter compared to a year ago.Miami has half as many properties in Realtor.com’s inventory of listings as it had a year ago, and the median age of inventory is down 30 percent from a year ago. Miami also continues to be a hot market for international buyers. In May, international clients purchased about 60 percent of the existing houses and condos and 90 percent of the newly built homes in Miami.[With inventory stabilized and median list prices regaining some of the 50 percent of value that was lost since 2006,] experts say one of the hardest hit foreclosure markets in the nation is on its way back.

Phoenix-Mesa AZ advanced two places on this Top 10 list between the third and fourth quarters of 2011. One of the areas hit hardest by foreclosures, Phoenix today still generates one foreclosure filing for every 317 housing units. Median list prices in Phoenix are up 15.38 percent on a year-over-year basis, but the market has to regain ground on what was lost in recent years. An uptick in demand driven by foreclosure bargains has contributed to a 27.47 year-over-year decline in the local median age of inventory. Unemployment in November was only 7.7 percent, below both state and national rates. With inventory in check, an improving local economy and growing demand, it’s only a matter of time before Phoenix returns to stability and lasting home value appreciation.

Orlando, FL secured its number three spot on the Realtor.com list of Top 10 Turnaround Towns as a result of progress made toward getting inventory back in balance with demand, suggesting the market may be stabilizing and turning a corner. The median age of inventory in Orlando on Realtor.com in the fourth quarter was down to 73 days, a 36 percent drop from a year ago and inventory was down 44 percent compared to a year ago. The Orlando MSA posted big declines in November foreclosure filings compared to the prior year and month. Lake, Orange, Osceola and Seminole counties posted 2,806 filings, or one in every 323 households. This is down 24 percent from November 2010, and nearly 36 percent down from the October 2011 filings. Fourth quarter 2011 year-over-year list prices on Realtor.com in Orlando rose 8.22 percent. Orlando leads the nation in the ratio of searches to listings on Realtor.com, a leading indicator that buyer demand may strengthen in the near future.

Fort Myers-Cape Coral, FL fell one rung to fourth place in the fourth quarter 2011 ranking on the list, but its recovery remains strong. Its median sale price has increased 20 percent over the past year, more than any other Florida market, though sales are down 13 percent.. The market led the nation in year-over-year median list price increases on Realtor.com (31.27%.) in the fourth quarter 2011, and ranked 14th in inventory declines that same quarter compared to a year ago. Only one in every 390 homes in the Fort Myers metro market received a foreclosure filing in December

Sarasota-Bradenton, FL ranks fifth in the nation on Realtor.com’s Top Turnaround Towns list for the fourth quarter 2011. Sales have been hopping in Sarasota and Bradenton this past fall, which is up 17 percent over last year. Median list prices were up 2 percent.] for the same period. This sales resurgence paralleled the drop in the available for sale inventory observed on Realtor.com, which just may place the remaining homes in range of a seller’s market. List prices on Realtor.com were up 10.78 percent in the fourth quarter 2011 compared to the fourth quarter 2010, and inventory is down 31 percent from a year ago.

Boise City, ID year-over-year for sale inventory observed by Realtor.com is down 40 percent, eighth best in the nation based on the year-over-year rate of decline. A key reason for the declining inventory is a reduction in foreclosures. A smaller inventory has helped drop the median age of inventory by 23.42 percent compared to a year ago. Smaller inventory is driving a median listing price increase of 13.77 percent, fifth best among Realtor.com’s 146 markets in the fourth quarter of 2011. Boise’s unemployment rate at 8.5 percent in November is better than the national rate.

Naples, FL is a newcomer to the Top 10 Turnaround Town list this quarter, powered by a 13.38 percent year-over-year increase in median list prices, seventh best in the nation overall, and a 35.94 percent reduction in for sale inventory. The median age of inventory in Naples is down 13.64 percent compared to a year ago. Demand in Naples, FL has been fueled by foreign buyers as the MSA attracts 6 percent of Florida’s international sales.While not everyone is bullish on Naples, sales are up and prices are moderating. The latest sales data from the Naples Board of Realtors confirms that the market is in the midst of change, but moving in the right direction. Sales of November single family homes are up 8 percent from November 2010 but sale prices are down 13 percent. Inventory is down 21 percent from a year ago.

Fort Lauderdale, FL has benefited from a shrinking inventory, which is down 41.63 percent year-over-year - sixth best (lowest) in the nation as observed by Realtor.com. Sales were up 22 percent in November and sale prices were up 18 percent year-over-year. List prices are up 7.84 percent over last year. However, like many other Florida markets, Fort Lauderdale, whose prices fell at least 46 percent from 2006 to 2010, still has a ways to go in part due to an unemployment problem affecting its housing market. But in November its unemployment rate fell to 9.4 percent.

Lakeland-Winter Haven, FL has observed a 9.09 percent increase in median list prices compared to a year ago. Its inventory has declined 35.28 percent since 2010 and its search-to-inventory ratio on Realtor.com, a measure of the number of buyers who are shopping for properties in the market, ranks fourth highest (best) in the nation in the fourth quarter 2011. As recently as a year ago, Lakeland-Winter Haven, FL was at the top of the national lists for foreclosure filings. But in recent months foreclosures in this MSA have been declining. In September, there were a total of only 86 distressed homes sold, compared to the 107 homes the previous month and 132 homes the previous year. Lakeland’s biggest hurdle on the road to recovery is its unemployment rate that dropped from 12 to 11 percent from the third to the fourth quarter, just a point over the state average.

Punta Gorda, FL returns to the Top 10 Turnaround Town list for the fourth quarter 2011 after it fell off the list the previous quarter. Like other Florida markets, it’s a market on the rebound, with both sale prices and sales up 11 percent year-over-year in November. Punta Gorda made it back to its 10^th place position on this list thanks to its29.25 percent year-over-year reduction in for sale inventory. But prices are just starting to turn around and must still make up for the 56.2 percent decline in home values observed since 2006. Currently Punta Gorda properties are selling at bargain prices, attracting both domestic and international buyers.

New originations ended the year down 29.3 percent from 2010, lower than since 2007, and December activity was down 2.7 percent from December 2010. Through November, originations totaled about 5.6 million, down 1 million from 2010, according to the December Mortgage Monitor report released by Lender Processing Services today.

Mortgages originated in 2010-11 have 90-day default rates that were lower than any vintage since 2005, before the housing crash and the implementation of tighter underwriting standards. Ninety day default rates are highest for loans originated in 2006, immediately before lending standards were tightened, and are lowest for loans originate in 2010 and 2011.

December origination data also shows that recent prepayment activity - a key indicator of mortgage refinances - has remained strong, with 2008-09 originations, high credit score borrowers and government-backed loans having benefited the most from recent, historically low interest rates.

Foreclosure starts plummeted in 2011, nearly 40 percent below 2010 for the year as a whole and down 3.7 percent from November to December.

LPS found that half of all loans in foreclosure in judicial states have not made a payment in more than two years. Foreclosure inventories in judicial states are two anmd a half times those in non-judicial states, and the gap continues to widen. Foreclosure sale rates in non-judicial states stood at approximately four times that of judicial foreclosure states in December.

However, pipeline ratios (the time it would take to clear through the inventory of loans either seriously delinquent or in foreclosure at the current rate of foreclosure sales) have declined significantly in judicial states from earlier this year.

Other findings from the LPS report:

Total U.S. loan delinquency rate: 8.15 percent

Month-over-month change in delinquency rate: 0.0 percent

Total U.S foreclosure pre-sale inventory rate: 4.11 percent

Month-over-month change in foreclosure pre-sale inventory rate: -1.3 percent

States with highest percentage of non-current* loans: FL, MS, NV, NJ, IL

States with the lowest percentage of non-current* loans: MT, WY, SD, AK, ND

*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.

In June, first-timers also accounted for 31 percent. The lowest level ever recorded in the three and a half year old survey of Realtoers was below 30 percent in March 2010.

Realtors participating in the survey blamed stringent credit requirements by lenders who have still not recovered from the Great Recession.

Nearlhy half of December sales went to repeat buyers, 21 percent went to investors, 13 percent to second home buyers, 24 percent were relocation sales and 2 percent went to foreign buyers.

NAR also released projections of 2012 existing home sales at 4.62 million, a 6.3 percent increase over 2011 and median prices at $167,300, a .7 percent rise over 2011.

Average days on market for properties over half a million averaged 222 days last week and has risen every week since August when DOM was at a year-low of 100 days, according to the latest monthly data from the Institute for Luxury Home Marketing. After falling since early July, inventories rose last week, reaching 23,416 homes in the ILHM market profile.

Thirty percent of listed properties have had a price decrease and even though the balance between supply and demand improved slightly in the first two weeks of the year, new listings slightly exceeded absorptions. Median price at $1,097,660 and median asking price per square foot at 333 were unchanged.

Top ten markets with the longest average days on market are Miami (308 days), Chicago (301), Detroit (271), Phoenix (264), New York (261), Orlando (253), Raleigh-Durham (252), Philadelphia (242), Charlotte (228) and Denver (226). Properties are moving fastest in Sacramento/Tahoe (173), San Diego (176) and Washington (176).

Overall existing-home sales rose 5.0 percent in December to a seasonally adjusted annual rate of 4.61 million from a downwardly revised 4.39 million in November, and are 3.6 percent higher than the 4.45 million-unit level in December 2010. The estimates from the National Association of Realtors are based on completed transactions from multiple listing services that include single-family homes, townhomes, condominiums and co-ops.

A new analysis from the senior economist at CoreLogic makes the case that declining household formation, vacant REOs and the shadow inventory of defaults and foreclosures in process together have created an oversupply of 1.1 million homes that is negatively impacting prices and will continue to do so for years-as long as it takes to reduce excess supply to levels that will not impact local values.

“Excess supply is important because it has implications for residential investment and therefore heavily impacts economic growth and home prices,” said CoreLogic’s Sam Khater in The MarketPulse, a new newsletter published by the data provider.

Khater argues that the net increase in housing units increased by an annualized 1.64 percent rate during the last five decades while household growth slowed from 1.54 percent to only 1 percent during the 2000s, and reached its rock bottom in 2008 and 2009 when household growth only averaged 0.5 percent. The decline reflected several factors: more women in the workforce, delayed marriage, lower formation rates for younger households and the recession.

Given the net increase in the supply and household growth between April 1, 2010 and November 2011, Khater estimates that the excess supply was roughly between 1.0 and 1.1 million units as of November 2011. Projections of roughly 600,000 net new housing units annually and an REO supply of 400,000 units a year will exacerbate the gap between supply and demand.

“It will take many years for the excess supply to be removed assuming no large policy intervention and the economy continues to grow slowly,” said Khater. “A large caveat to this estimate is the potential for policy intervention because, absent the REO supply, the excess supply would rapidly decline.”

Inventories for the 18^th straight month, largely due to a lower volume of foreclosures, and are now 25.7 percent lower than they were at his time last year. Prices remained nearly even with November prices, down just 0.35 percent month over month and down 3.5 percent from December 2010.

We’re pleasantly surprised to see the year end with such strong sales, and hope this trend will continue into the traditional spring selling season,” said Margaret Kelly, CEO of RE/MAX, LLC. “This December jump may be due to increased investor involvement and transactions that were scheduled to occur before the end of the year, but with prices at or very near the bottom and historically low interest rates, consumers are finding real value in this market.”

In December, the median sales price was $179,587, which was nearly even with November. On a month-to-month basis in 2011, prices rose in five months and declined in seven, not demonstrating a clear trend in either direction. December home prices were fractionally lower than what was seen in November, and 3.5 percent lower than December 2010. Year-to-year home prices have declined for 15 months straight. In the December survey of 53 metro areas, 20 showed price increases from November, while 11 experienced price increases over December last year, including: Miami, FL +16.7 percent, Orlando, FL +14.0 percent, Little Rock, AR +6.9 percent and Phoenix, AZ +6.4 percent.

While sales in November followed the usual seasonal trend, falling slightly, December sales surprised most analysts and rose higher. On a month-to-month basis, December sales rose 5.7 percent. For the sixth consecutive month home sales were at a higher level than the same month in the previous year. Of the 53 metro areas included in the survey, 20 experienced higher sales than in December 2010, including: Providence, RI +32.3 percent, Wilmington, DE +24.1 percent, Nashville, TN +20.5 percent, Miami, FL +19.1 percent, Albuquerque, NM +17.0 peremt and Chicago, IL +16.7 percent.

For homes sold in December, the average days on market was 98, just 1 day higher than the average reported in November, and 2 days higher than the average seen in December 2010. Only two months in 2011 saw a days on market average below 90. July and September both reported 88, which represents the lowest average seen in the last 12 months. Days on market is the number of days between first being listed in an MLS and when a sales contract is signed.

The average inventory of homes for sale in the 53 metro areas surveyed in December dropped 11.0 percent from November and 25.7 percent from December last year. Inventory has fallen for 18 consecutive months. Given the current rate of sales, and the active inventory, the resulting months supply is the same as seen in November, 7.8 months, but significantly lower than the 10.2 month supply reported in December 2010. Months supply is the number of months it would take to clear a market’s active inventory at the current rate of sales. A six-month supply is considered balanced.

In some markets with high foreclosure saturation rates, foreclosure inventories will cause temporarily price swings as inventories rise and fall, but even in these cities, in the long run, local economies will be the key.

That’s how Ingo Winzer sees the year ahead. In 1990 Winzer created Local Market Monitor because there wasn’t anything like it and developed of the National Review of Real Estate Markets, which analyzed conditions in 100 US Markets using such economic data as home values, employment growth, and population growth. More recently he created Equilibrium Home Prices, which have proved valuable in assessing real estate market risk during the last two economic cycles. He’s more interested in what makes local markets tick than broad national forecasts that may be irrelevant to local professionals, consumers and investors.

“The evidence is now pretty clear that a sustained economic recovery is underway, although housing markets won’t feel much benefit until next year. Consumers are in no particular hurry to buy a house because they don’t see home prices going up. Homeowners - as opposed to investors - would rather wait to pay a higher price than admit to their friends that they bought too soon. NO market has yet seen an increase in prices,” Winzer said in his January economic outlook.

“Local price increases of 6 percent are going to be difficult, but 3 to 4 percent are more likely. Some markets, like Atlanta, that are struggling with employment are going to have a hard time while others will do markedly better,” he told Real Estate Economy Watch.

Local Market Monitor is popular with investors who rent out their holdings because of its local data and forecasts on rents. Noting that more people today want to rent than buy, Winzer believes that many retirement and second home markets that have been flooded with foreclosures are going to take a long time–ten years or more-for prices to recover.

“In other markets where investors are active like Miami it’s not so bad because there is great demand,” he said.

Housing markets are going to continue to improve with job growth, even at just 2 percent a year, and economic growth will determine rental increases as well as home values. Overall rents are going to reflect population flows. “In a recession people tend to sit still. When things pick up, people are more willing to move to where there are jobs,” he said.

For long term investors, however, projecting rental cash flow ten or twenty years down the road is difficult even at the local level because of the sensitivity of rents to local economic conditions.

“My advice to the long term investor is to reduce risk by buying a more expensive property in a desirable neighborhood where you will be able to charge a premium rent. In lower cost properties, rents may become comparable to the monthly costs of owning a home. Renters in a lower cost property are more likely to buy than those in a higher cost property,” he advised.

Even though 60 day delinquencies ended the month of November 25 percent lower than a year ago, the 18 month trend toward fewer delinquencies ended as homeowners continued to struggle with their finances, according to Lender Processing Services, Inc.

At the same time, new problem loans - those loans seriously delinquent as of the end of November that were current six months prior - have not improved significantly in the last year. As a result, inventories of troubled loans remain significantly higher than pre-crisis levels across the board.

The November mortgage performance data also showed both new and repeat foreclosure starts dropped sharply in November, down nearly 30 percent from the month prior. As late-stage delinquencies in the pipeline still number close to 2 million, the sharp drop is more indicative of the impact of ongoing document reviews, additional state legislation and new regulatory requirements rather than a shift in trend.

The national delinquency rate rose 2.7 percent in November to 8.15 percent. States with highest percentage of non-current* loans: FL, MS, NV, NJ, IL States with the lowest percentage of non-current* loans: ND, AK, WY, SD, MT

The Institute for Luxury Home Marketing reported this week that homes in its market profile are how spending an average of 231 days on market and luxury properties in all markets it tracks were averaging 215 days on market at the end of the year, a year-long high.

The ILHM Luxury Composite Price this week is $1,088,665. Total inventory hit its year-long low at 24,000 properties at the end of the year. The national inventory of all homes for sale in November was 2,580,000, according to the National Association of Realtors, the lowest level of the year.

Markets where luxury homes are taking longer to sell than the national media are: Chicago (288 days); Detroit (260 days); Miami (303 days); New York (262 days); Phoenix (261 days); and Raleigh-Durham (243 days).