Dennis Norman
Forecast is for further declines
In a report issued today by First American CoreLogic national home prices continue to decline with their HPI (Loan Performance Home Price Index) declining by 5.7 percent in November 2009 compared with the year before. If you take the distressed sales out (foreclosures, short sales, etc) the nation decline in HIP for the same period was 5.1 percent.
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Including distressed transactions, the HPI (home price index) has fallen 30.0 percent nationally through November from its peak in April 2006. Excluding distressed properties, the national HPI has fallen 21.8 percent from the same peak.
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When distressed sales were included Nevada (-22.5 percent) remained the top-ranked state for annual price depreciation followed by Arizona (-14.9 percent), Florida (-13.7 percent), Michigan (-12.6 percent) and Idaho (-11.0 percent). All of these states also showed month-over-month decreases in their HPI.
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Excluding distressed sales, the worst five states for year-over-year price declines changes slightly. Nevada (-19.7 percent) still holds the top spot, followed by Arizona (-14.1 percent), Florida (-12.3 percent), Michigan (-10.6 percent) and West Virginia (-9.6 percent).
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Regardless of whether distressed transactions are included or excluded, the markets that are expected to experience the largest year-over-year declines are in the traditional industrial centers of the Midwest and Great Lakes that have been hit hardest by the current recession. Leading the list are four Michigan markets: Detroit (-13.1 percent), Sault Ste. Marie (-11.0 percent), Saginaw (-9.7 percent) and Kalamazoo (-7.8 percent).
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The hard-hit markets of the Sun Belt are also predicted to hit their true bottom in the next 12 months, as evidenced by a substantially smaller rate in their projected price declines relative to the pace of decline in 2009. Select markets include: Las Vegas (-6.5 percent), Phoenix (-3.3 percent), Reno (-3.3 percent) and Orlando (-2.5 percent).
“On average, we are expecting home prices to turn around next spring,” said Mark Fleming, chief economist for First American CoreLogic. “While the share of REO sales are down, allowing price declines to moderate, there is concern moving forward with the levels of shadow inventory, negative equity, and the ability of modification programs to mitigate this risk,” he said.
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