Clear Capital™ Reports Resurgence in the Rust Belt Amidst Limited U.S. Home Price Gains
Detroit’s 14.1% quarterly price gain tops all major U.S. markets, surpassing five-month leader Cleveland (12.8%); while National quarterly home prices post modest 1.4% gain.

In yet another sign that housing markets are on the mend, Clear Capital reported Wednesday that values of residential properties are posting increases throughout the country, led by a resurgence in the Rust Belt. The company said seasonal softening puts the nation’s gains at a modest 1.4 percent for the rolling quarter ending in November.

That’s less than half the 3.7 percent returned the previous month, and nearly five points less than the 6.3 percent gain reported for September, according to Clear Capital’s study. But it’s a gain, nonetheless, and a welcome reprieve from the free-falling days of the last several years.

Clear Capital’s latest report features data compiled through November 27, 2009. Its price change assessments are based on the company’s patent-pending technology which utilizes a rolling quarter, or moving three-month period.

All four regions of the country continued to show quarterly price improvements this month, with the spread in gains narrowing again. Clear Capital says the numbers in the nation’s Western region are particularly encouraging, reflecting moderate price gains among even its largest markets with high levels of REOs.

Clear Capital’s Home Data Index (HDI) Market Report shows that quarterly home prices in the West rose 1.5 percent, surpassed only by the Rust Belt states of the Midwest, which saw prices improve 2.3 percent.

Residential values in the South increased 1 percent, and they were up 0.9 percent in the Northeast.

The best-performing major markets continue to experience price increases, minimizing their yearly losses.

The Lake Erie cities of Detroit, Michigan, and Cleveland, Ohio, topped Clear Capital’s list of the highest performing markets this month with double-digit gains, 14.1 percent and 12.8 percent, respectively. Phoenix, Arizona – a longtime leader of the lowest performing major markets – moved into Clear Capital’s highest performing list this month with a solid quarterly increase of 4.4 percent.

Seasonal home price trends have returned most of the worst-performing major markets back to negative territory, but Clear Capital says even these declines are relatively minor – all less than 3.8 percent. The company’s study shows that while quarterly price changes continue to show slight dips, annual price changes are improving.

“The modest and improving yearly changes we’re seeing at the national and regional levels show that many areas have sustained stable price levels for nearly all of 2009 after the dramatic fall off in prices in the preceding three years,” said Dr. Alex Villacorta, senior statistician for Clear Capital. “Yet, the continued rolling quarter declines experienced over the past two months have helped confirm that seasonal influences have returned.”

Illustrating what could be a good sign of things to come this winter, national REO saturation rates did continue a downward trend this month, according to Clear Capital, dropping another 1.1 percentage points to 26.9 percent.

Clear Capital says the return to seasonality this winter could expose the dynamics of REO inventories. The traditionally slower winter season is associated with a reduced number of home sales and an increase in marketing times. REO properties, on the other hand, are typically priced to sell in a given timeframe regardless of season.

The company says these dynamics will likely result in increased REO saturation rates in the winter months, but cautions this shouldn’t be interpreted as an increase in REO volume or an impediment to the recent recovery.

“Even with a potential increase in REO saturation rates, many markets are still showing strong evidence of stabilizing, indicating signs of a price bottom,” added Villacorta. “With the passing of the tax credit helping to strengthen the momentum through the winter, many buyers may find that this season is a good time to take advantage of record low prices.”