Index shows roughly flat value trend for much of ’09
A report released this week by Radar Logic finds signs of stabilization in home values, though cautions that some markets may see a continuing slide based on a buildup of foreclosure-related inventory and a typical seasonal slowdown in sales activity.
According to the company’s RPX Index, which measures trends in the price per square foot of homes in 25 U.S. metro areas, the freefall in house prices that was evident in 2008 has held roughly flat for the past several months — but the slowdown in the prices may represent just a step toward recovery.
The company reported a month-over-month price hike in nine U.S. metro areas in February, compared to monthly price increases in six MSAs in February 2008.
Radar Logic cited sales data from the National Association of Realtors trade group and from another monthly price index, the Standard and Poor’s/Case-Shiller price index for 20 U.S. metro areas, as evidence for market improvements — while noting that the operators of the Case-Shiller index do not believe a deceleration in downward price trends constitutes evidence for a recovery.
There will continue to be downward pressure on prices, Radar Logic states in the report.
The volume of motivated sales — defined as the sales of homes at foreclosure auctions and sales of foreclosed homes by financial institutions — has increased by 532 percent across the 25 MSAs tracked in the RPX Index since the beginning of 2006, while the other sales have declined by nearly 71 percent — for an overall sales decline of 58 percent.
The report states that motivated sales have jumped from 2 percent of all sales for the 25 tracked metro areas in 2006 to 38 percent in January 2009.
“Although prices in other sales have not corrected as much as prices in motivated sales, they have been moving downward, and in many (metro areas) other prices are starting to converge with motivated prices,” according to the report.
In some California metro areas, the price of “motivated” properties “appear to have become (or are in the process of becoming) the market price,” the report also states, though that “could actually be good news,” as it could suggest a return to normal value trends.
The report also warns that there have been reports of an “imminent surge in foreclosure filings” that could raise the inventory of foreclosed homes, and that — coupled with typical seasonal slowdowns in sales — could put more downward pressure on pricing.
And by spring 2010 the data should present “a clear picture of which way the market is moving,” Radar Logic reported.