According to the latest index from Clear Capital, home price gains in the US were considerably lower over the last quarter to the end of February. Gains fell to just 1% from the previous figure of 2.5%.
These figures are significant as this is the largest decline since 2010, and as the article in Propertywire points out, this was when gains were coming off first-time homebuyers’ tax credit. Clear Capital anticipates that 2014 will only see growth of between 3% and 5%. In addition, national REO saturation in February increased from 20.9% to 22.7% which is the largest gain for more than two years. This suggests that rising REO saturation rates combined with declining quarterly gains could mean house prices will see quarterly declines during the next few months. There's also still one more month of winter to go and it could be that near-term price declines are not that unlikely. Over the last quarter, 3 out of 15 major markets experienced slight declines. Prices in the other 12 major areas remained mostly flat, and none of the markets managed to attain 1% growth.
In Jacksonville, REO saturation rates increased by 3.2% over the last quarter, reaching 43.2%. The rate of distress sale activity in Jacksonville is the highest out of the 50 largest Metropolitan areas, and this is the biggest increase for the area since the beginning of 2011. The rise in distress sales has put pressure on price gains, and quarterly gains were just 0.7% which is the lowest rate of growth for Jacksonville since the middle of 2011.
Experts are concerned that quarterly rates are falling rapidly and that overall prices could enter negative territory should the current conditions continue. Investor demand is anticipated to fall, and distress sales still account for nearly one quarter of all transactions. House prices have fallen dramatically since the housing crisis began in 2006, but over the last couple of years the numbers of distress sales have been partially offset by investor demand, but there's no guarantee this demand will continue in 2014.
It's not particularly unusual to see an increase in distress sales activity during the winter months, but the current figures are cause for concern. It's hoped that things will begin to correct themselves in the spring as otherwise the housing market could be in for a less than stellar year. Even though price gains of between 3% and 5% have been forecast, the housing market is still susceptible to price declines, and just about everyone agrees that this year will be one of moderation.