Monday, 08 March 2010 by Property Wire
Residential property prices in the US increased 5% in February from a year ago despite an incoming wave of real estate owned property that lenders are dumping on the market.The increase in prices comes on top of a 2.3% yearly increase in January but prices are unchanged on a quarterly basis, according to the figures from the Clear Capital Home Data Index.If the increase in demand that preceded the end of the last tax credit is any indication, home prices may dip only slightly into negative territory before getting an added boost before the April tax credit deadline, said Alex Villacorta, senior statistician at Clear Capital.
Among the best performing areas is Providence, Rhode Island, where they increased 6.1% from the previous three months, the highest increase of any metropolitan statistical area (MSA). California had five of the 15 highest performing markets as Los Angeles prices gained 2.2% over the rolling quarter.In 11 of the top 15 markets REO saturation increased by an average of 1.3% but Villacorta said they do not seem to be harming the market. We observed an expected increase in REO saturation this month as the flow of foreclosures continued to come into the market, while traditional non-distressed sales wait to be listed in the spring and summer months, he explained.
The price gains in the early months of 2010 contrast sharply with 2009, when credit lines were cinched, investments dropped in value and financial institutions facing failure dumped REOs onto the market, according to the report.Meanwhile the March edition of the Beige Book from the Federal Reserve shows that residential estate markets showed improvement but like many economic sectors, the unusually harsh winter weather across America this year slowed growth.
Improvement in the residential real estate market has been primarily in the low-end and starter home sector, the result of the extended homebuyer tax credit. The Philadelphia, Cleveland, Kansas City, and Dallas Federal Reserve Districts reported that sales were strongest in that sector, both due to the tax credit and the difficulty obtaining financing for higher-end homes. The St Louis and Richmond districts reported mixed results, but in Richmond, the district noted better weather might have created residential housing improvement.