Although home prices are still declining, some analysts believe that summer 2011 will ultimately be the start of some degree of market stability in real estate. Clear Capital, a real estate valuation firm, has released new information indicating that the median price paid for distressed properties has finally started to rise. This could indicate that the REO market is finally seeing increased activity at the upper end of its price range and, ultimately, may be the first sign that prices are on their way to stabilizing, though by no means skyrocketing[1].
At minimum, said Clear Capital in commentary on the data and findings, “this is a positive signal [that] marks the longest gain in median price for REOs since the market correction began in 2006.” However, this is just the beginning, emphasized director of research and analytics at Clear Capital, Alex Villacorta[2]. “We are still far away from the strong demand needed to fully turn things around.”
Historically, real estate prices tend to rise when the market is less saturated with REO and distressed properties. With REO saturation down, this could mark the beginning of what may still be a long, slow recovery.
Do you think that the market is getting ready to or has already turned a corner?
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[1] http://www.dsnews.com/articles/clear-capital-stability-ahead-as-distressed-property-prices-rise-2011-06-08
[2] http://www.marketwire.com/press-release/clear-capitalr-reports-quarterly-home-price-decline-slows-signs-market-stability-as-1524669.htm
As a child of the 60′s I would like to contact these guys and see where they are getting the stuff that they are smoking! I guess they do not see the millions of foreclosed homes the banks have not yet placed on the market or the fact that over 30% of homeowners are underwater and more likely to default, putting even more distressed property on the market. Another minor point is that, in the face of this bloated inventory, the number of potential buyers has been halved by the new lending requirements; 780 FICO, 20% down, 5% reserves, in addition to 5% closing costs. Also, banks cannot lend, they need to be able to make up for the fact that their mortgage backed securities are worthless, as the equity in the mortgages backing them has disappeared! I’m glad Alex is not investing my money.
Summer 2011 will show seasonal signs of recovery. The true test will not be determined until after the winter numbers are evaluated. If summers increase can withstand a winters worth of decline then we may actually be headed in the right direction.
Prices rise every summer. Everyone knows this. They drop during the winter.
Only when the post winter numbers are better than last years are you seeing real progress.