Home Prices Hit New Post-Crash Lows

U.S. home prices have fallen to new post-crash lows, confirming a predicted “double dip” in housing prices, according to new figures from housing data firm Clear Capital.

Nationally, home prices were down 4.9 percent compared to the previous quarter, according to Clear Capital’s report for April. That decline put prices 0.7 percent below the previous post-crash low reported in March 2009, producing the so-called “double dip.”The quarterly decline reversed all the gains recorded over the previous year, with prices down 5.0 percent compared to their April 2010 level. The decline was blamed on a rising tide of foreclosed properties, known in the industry as REOs (real-estate owned), which made up 34.5 percent of all sales in the current report.“The latest data through April shows a continued increase in the proportion of distressed sales that are taking hold in markets nationwide,” said Alex Villacorta, Clear Capital director of research. “With more than one-third of national home sales being REO, market prices are being weighed down as many markets have not regained enough footing to withstand the strain of the high proportion of REO sales.”The new data comes on the heels of last month’s report suggesting that home prices were stabilizing in most of the country. In the current report, however, home prices showed quarterly declines in every single metropolitan area surveyed.The smallest decrease was posted by the Charlotte, N.C. area, where prices were down 1.4 percent compared to the previous quarter, followed by Washington, D.C., which showed a 1.6 percent decline. The biggest quarterly decline was seen in the Detroit, Mich. metro region, where prices were down 13.4 percent in a market where REOs made up nearly 56 percent of all sales.High levels of REO sales tend to pull down home prices in general, because they typically sell at a steep discount compared to conventional home sales. At the same time, a heavy saturation of REO homes on the market suppresses home prices for conventional sales as well, because of the price competition.The Clear Capital survey uses an unusual “rolling quarters” model in which data for the past three months is compared to a previous “quarter” consisting of the four months prior to that period. The model is intended to dampen out the volatility that often appears in month-to-month data while still allowing for current monthly updates on market conditions.