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REO Sales Diminish to Under 20% of Overall Home Sales: Clear Capital

""Clear Capital"":http://www.clearcapital.com released a new market report Tuesday, tracking home prices through the end of November. Nationally, quarterly price gains were cut by more than half compared to readings from the month before. For November, home prices edged up just 1 percent.


Even with fewer fair market sellers put their homes on the market--which is typical during the winter season--Clear Capital says REO sales held steady at 18.4 percent of total sales. Even with the effects of winter unfolding, the company says REO saturation trends don't yet sound any alarms. Should distressed sales hold around their current level for the next several months, Clear Capital says downward price pressure should be minimal â€"- but that's barring any other outside economic stress.

Dr. Alex Villacorta is Clear Capital's director of research and analytics. He said, ""November housing trends hinted at a winter slowdown ahead. While short-term growth across the country generally slowed, the housing market has built good momentum over the last year. As previously reported, these gains coupled with reduced rates of REO saturation signal housing should be strong enough to ride out winter, barring any shocks. That said, we remain very concerned about the fiscal cliff given both the threat of uncertainty and the potential for fiscal constraint moving forward.""

Villacorta expects to see a pull-back in housing if the fiscal cliff threat becomes reality and we reach year-end with no compromise on Capitol Hill. He warns that many potential homebuyers on the fence could retreat into the renter population should they be hit with higher taxes.


Housing affordability is already beginning to come down off the highs seen for months on end now that home prices are rising in the majority of markets. Should the country head off the edge of the cliff, that translates to a reduction in net income for would-be homebuyers, Villacorta warns. ""Even if prices remain attractive, taking a hit on income will surely deter some demand at a time when markets need it the most,"" he observed.

As the fiscal cliff draws closer, Clear Capital says 2012's housing market momentum is severely at risk, with the lowest performing metro markets likely to become tell-tale demonstrations that the recovery is not nearly strong enough to be immune to seasonal slowdowns or fiscal constraints.

The seasonal effects of winter also started to take hold in three out of four regions. A pull-back in growth at similar magnitudes was echoed in the West, South, and Northeast, with quarterly gains of 2.0 percent, 0.8 percent, and 0.3 percent, respectively. The Midwest was the only region to hold the momentum of quarterly growth over October. However, at just 0.9 percent, the region is in line with the level of growth across the other regions and at the national level.

Price gain stalls are not as evident in yearly price trends. National yearly home prices in November held their ground with 4.6 percent growth. Putting the recovery into perspective, this time last year, national home prices had declined 2.8 percent. The South also mostly held its ground, with gains of 4 percent over the last year.

The West, though, continued to lead the recovery, yet with softer yearly gains of 10.3 percent in November, over October's yearly growth of 11.4 percent. The region continued to make progress in that REO saturation declined to just 17.8%. Since the peak in 2009, REO saturation has fallen by more than half.

The Northeast posted just 1.4 percent growth year-over-year, constrained by nearly flat quarterly gains. The region also saw price trends flat in the top tier sector, or homes selling for $423,000 and more.

The Midwest bucked the trend of softening gains, and posted yearly growth of 2.9 percent in November. While the Midwest hinted at a slowdown in October, things appear to have picked back up. Clear Capital says it continues to expect volatility out of the Midwest moving into the deeper winter months. The region typically exhibits price fluctuations, as it represents the lowest median prices of any of the four regions.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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