Although 2009 started out with record-setting home price declines in the aftermath of the housing meltdown, residential property values have rebounded substantially to close out the year posting a modest annual decline of 1.3 percent, according to the real estate valuation firm “Clear Capital”:http://www.clearcapital.com. The company says it’s the smallest annual decline since the housing crisis set in three years ago, offering hope that the worst really is behind us.

“The stronger positive gains we saw this summer have softened into the fall and early winter, but it’s good to see that they’ve remained in positive territory,” Kevin Marshall, president of Clear Capital, commented. “It’s remarkable that home prices for the nation as a whole were generally flat for 2009, given this year’s volatility.”

The minimal 1.3 percent drop is certainly something to sing about when you compare it to the 20.4 percent annual decline recorded for 2008.

Clear Capital’s Home Data Index (HDI) Market Report released Thursday paints a clear path of improvement. National price changes remained in positive territory, returning a 1.7 percent increase during the fourth quarter of 2009, with all regional quarterly results in the plus column.

Several markets’ stats stand out in Clear Capital’s report, most notably the 1.1 percent quarterly price gain in Las Vegas – the first quarter-over-quarter positive since 2007 for the city, whose bursting bubble echoed louder than probably any other place in the country.

Clear Capital says that while the Sin City’s yearly price decline is still high at 27.4 percent, it is showing signs of transitioning from home price free-fall, to more traditional trends.

Detroit’s 17.4 percent quarterly home price gain led all major U.S. markets for the second month in a row, helping to pull the Midwest regional results to a 4.1 percent growth for the quarter and 4.4 percent for the year.

Overall, home prices across the country continue to improve with seven of the 15 highest performing markets posting positive yearly gains in Clear Capital’s study. Compare that to 2008, when only one market returned positive year-over-year marks. The shining star within the 2009 annual numbers – Cleveland, Ohio, where home values jumped 63.8 percent compared to 12 months earlier.
Such swings in price change have made it difficult for nearly everyone, from policy makers to banks and investors, to keep an accurate account of current trends, Clear Capital said in its report. This has hindered the ability to set policy, adjust REO strategy, price collateral, and judge the success of loan modification and moratorium programs, the company explained. While heightened REO activity will continue into next year, Clear Capital says the pause in price declines during the second half of 2009 has allowed all parties to gain perspective on current trends and be better prepared for 2010.
With this new perspective, Clear Capital says the financial turmoil that marked the early part of last year has been replaced with a dose of incentivized optimism. Homebuyer credits mixed with low interest rates have helped return homebuyers to the marketplace. At the same time, loan modification programs have helped regulate the new supply of distressed properties. Throughout 2009, the company says these factors contributed to the national REO saturation rate dropping from 41.5 percent in the first quarter, to 25.5 percent by the end of the year. Clear Capital explained that while still high by historic standards, this downward swing in REO saturation has helped drive prices up and stabilize property values.