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Marvin Von Renchler's Blog

By Marvin Von Renchler | Managing Broker in Tigard, OR


U.S. Home Prices Continue Slight Decline as

West Region Drags Nation Down According

to the Clear Capitalâ„¢HDI Market Report

While national home prices have appreciated 4.2% since early 2009,

the West region is poised to double dip by the end of Q1 2011 if

trends continue.

TRUCKEE, Calif. – March 10, 2011

– Clear Capital (www.clearcapital.com) released its

monthly Home Data Indexâ„¢ (HDI) Market Report, and reports a quarter-over-quarter national

price change of -1.4 percent. The HDI Market Report provides the most current (through

February 2011), granular and relevant analysis of how local markets performed compared to

the national trend in home prices.

Report highlights include:


National home prices continue to drift downward, largely due to the West’s quarterover-

quarter declines (-4.5%) that could lead the region into double dip territory as

soon as next month.


National home prices are up 4.2% from two years ago, yet the gains of other positive

market indicators have yet to extend to the greater housing market.

“Despite distressed inventory pressure and traditional winter inactivity, current trends are

continuing to show a softening of price declines," said Dr. Alex Villacorta, director of research

and analytics at Clear Capital. “The 3.9 percent quarterly decline we observed in December

has given way to moderating declines with the national price index now down only 1.4

percent, suggesting a leveling of prices is on track for spring.”

“From a larger perspective, prices are still up 4.2 percent off of the absolute lows of the

housing crash, a sign that long term gains can be realized amidst the volatile behavior of the

last two years,” added Villacorta. “Yet, when comparing this growth to other economic

indicators over the same time period, it is clear that the housing market still has a long way to

go toward a sustained recovery.”

U.S. Home Prices Continue Slight Decline

as West Region Drags Nation Down According

to the Clear Capital HDI Market Report Page 2 of 8

Broader Perspective Revealed

At the end of 2010, Clear Capital's reported -3.9 percent year-over-year national price change

was an alarming sign of a housing market absent tax incentives and follow-up to a weak

home-buying season. Today, these price declines have paused among some housing markets,

giving hope that price stability will prevail over ongoing default pressures. While knowing

recent trends is critical to those making immediate decisions, longer term price performance is

an important indicator for investors, policy makers, builders and buyers when considering

overall market health. These trends help show the current position of the market within

longer-term cycles giving a more complete view of how specific policy changes have impacted

the market. They also provide a good basis for comparison to other investment vehicles.

In early 2009 national home prices reached a low point amid a near freeze in credit, rapid

liquidation of REOs on behalf of institutions trying to stave off insolvency, rapidly rising

unemployment (up 3.7% since February 2007), falling GDP (down 2.0% from the first quarter

of 2007) and, for perspective, a stock market (Dow Jones) that had fallen 53 percent since its

peak in October of 2007.

Broad-based Price Appreciation (Over Last Two Years)

Today, as we look at the current economic environment for home prices compared to 2009,

credit is becoming more available (albeit still limited), institutions have a better understanding

of distressed pricing and marketing, as well as the damaging effects of flooding the market

with distressed inventory. In addition to market participants being better informed,

unemployment has finally ticked downward to 8.9 percent from its peak of 10.1 in October of

2009 (Source: U.S. Bureau of Labor Statistics), GDP has ticked up 4.2 percent (Source: U.S.

U.S. Home Prices Continue Slight Decline

as West Region Drags Nation Down According

to the Clear Capital HDI Market Report Page 3 of 8

Bureau of Economic Analysis), and the Dow Jones continues to add points on-top of its

already impressive 80 percent-plus two-year return.

Even with the advances of other economic indicators, home prices have gained only 4.2

percent nationally over the last two years while some markets and even regions are on the

verge of reaching new lows. When considered among the backdrop of core inflation's two

year gain of 1.6 percent, these gains are even less impressive. While an 80 percent price gain

by the Dow Jones is not a realistic two-year goal for housing, other sectors (precious metals

and energy) have also produced significant gains.

These positive signs from other market indicators have yet to extend to the greater housing

market as distressed activity and inventories remain highly elevated. Looking ahead, it's

important to understand that current price movements at the local level should be digested in

light of their greater historical trends and local economic conditions. Diving deeper into the

regional results, as well as the highest and lowest performing markets will expose how

specific locations deviate substantially from the nation's more gradual stabilization.

U.S. Home Prices Continue Slight Decline

as West Region Drags Nation Down According

to the Clear Capital HDI Market Report Page 4 of 8

National/Four Region Market Overview (Feb. 2010 - March 2011)

West Region Slows Flattening National Home Price Trend


Nation returns third consecutive month of slowing quarter-over-quarter price declines.


Despite national trend toward flattening of home prices, the West region continues

price declines. Eight of the fifteen lowest performing markets are from the West.


Driven by heavily distressed markets in Arizona and Nevada, the West region

expected to set new double dip price lows as early as next month.

For the third consecutive monthly HDI Market Report, quarter-over-quarter home prices

slowed their descent. This month’s modest national -1.4 percent price change is a slight

improvement over the -1.6 percent changes reported last month. Weak home prices persist in

the West region, however, led by a -13.4 percent yearly price change in Tucson, AZ. Of the

eight lowest performing markets from the West, five have REO saturation rates above 42

percent and more than half the homes sold in Las Vegas are bank owned.

As prices continue to slide, new record price lows for the West are only 0.7 percent away and

could be realized as early as next month. This is notable, since two years have passed since

the prior record price lows were seen in early 2009. While local variations persist, this leaves

some recently vested investors in the West with little potential gain while broadly amplifying

the risk of losses.

U.S. Home Prices Continue Slight Decline

as West Region Drags Nation Down According

to the Clear Capital HDI Market Report Page 5 of 8

Metro Markets (Feb. 2010 – March 2011)

Mixed Results


Washington, D.C. continues to see quarter-over-quarter improvement while

maintaining longer term gains.


Quarter-over-quarter prices continue to improve for all the highest performing markets

except Pittsburgh, PA; Jacksonville, FL; and Cleveland, OH.


The highest performing major markets continue solid quarter-over-quarter gains, with

12 of the 15 markets improving over last month’s report, and only Miami, FL (-0.1%)

experienced a negative price change.

Over the past two years, home prices in eight of the fifteen listed markets have seen values

decline. Similarly, despite impressive price gains by percentage in a few of these markets, all

of them remain firmly entrenched in negative territory compared to their market peaks. In the

worst case, after falling 22.4 percent over the last two years, Orlando, FL home prices are just

above lows last experienced in 1998.

These lows are book-ended by the two-year 81.7 percent price gain in the extremely low

priced and hard hit Cleveland MSA. The magnitude of markets with price gains quickly abates.

Memphis, TN, follows with a 20.8 percent gain over two years; followed by Pittsburgh, PA

(15.2%); Washington D.C (13.2%); and Rochester, NY (12.2%) rounds out the top five highest

performing markets over the past two years. As for Cleveland's leading two-year gains, it's

critical to note that this market still remains 55.9 percent below its market peak.

U.S. Home Prices Continue Slight Decline

as West Region Drags Nation Down According

to the Clear Capital HDI Market Report Page 6 of 8

Lowest Performing Markets Drift Downward


Struggling markets continue to see quarter-over-quarter prices erode.


Two-thirds of the lowest performing markets experiencing year-over-year price

changes greater than -9.0%.


Richmond, VA; Phoenix, AZ; and San Francisco, CA were the only markets to see

minor improvements in their quarter-over-quarter gains in this month’s report

compared to last month.

The lowest performing markets have experienced longer term losses. Only three markets

among this set managed positive price gains over the last two years, while all fifteen have

experienced year-over-year declines. Even the three markets posting the largest two-year

gains, are diminished by the fact that the price gains constitute an abrupt and short-lived

rebound in the latter half of 2009, which subsequently masks smaller but significant declines

in 2010. The two-year gains within San Francisco, CA (9.2%); St. Louis, MO (6.6%); and

Detroit, MI (6.6%) MSAs are quickly being eroded by losses (-2.8, -9.2 and -12.8) over the past

twelve months, respectively.

Perhaps not as surprising, Las Vegas, NV (-22.2%); Tucson, AZ (-20.8%) and Phoenix, AZ

(-17.1%) lead in terms of poorest price performance over the past two years. What might not

be expected is that Seattle, WA (-16.9%) and Portland, OR (-14.6%) experienced the next

poorest positions, largely a result of the approximately one year delay both these markets

have experienced compared to the national cycle.

U.S. Home Prices Continue Slight Decline

as West Region Drags Nation Down According

to the Clear Capital HDI Market Report Page 7 of 8

About the Clear Capital Home Data Index (HDI) Market Report

The Clear Capital HDI Market Report has displayed consistent market trends as other leading

indices (peak, trough, secondary trough and tax credit run-ups). Despite these consistencies, a

critical difference is that HDI’s methodology enables more timely and granular reporting.

The Clear Capital HDI Market Report:


Offers the real estate industry (investors, lenders and servicers), government agencies

and the public insight into the most recent pricing conditions, not only at the national

and metropolitan level, but within local markets as well.


Data is built on the most recent information available from recorder/assessor offices,

and then further enhanced by adding the company's proprietary streaming market data

for the most comprehensive geographic coverage and local insights available.


Reflects nationwide coverage of sales transactions and aggregates this

comprehensive dataset at ten different geographic levels, including hundreds of

metropolitan statistical areas (MSAs) and sub-ZIP code boundaries.


Includes equally-weighted distressed bank owned sales (REOs) from around the

country to give the most real world look of pricing dynamics across all sales types.


Patent-pending rolling quarter technology allows for the most current market data by

providing more frequent updates. This ensures decisions are based on the most up-todate

information available.

Clear Capital Home Data Indexâ„¢ Methodology


Generates the timeliest indices in patent pending rolling quarter intervals that compare

the most recent four months to the previous three months. The rolling quarters have

no fixed start date and can be used to generate indices as data flows in, significantly

reducing the multi-month lag time experienced with other indices.


Includes both fair market and institutional (real estate owned) transactions, giving

equal weight to all market transactions and identifying price tiers at a market specific

level. By giving equal weight to all transactions the HDI is truly representative of each

unique market.


An address-level cascade results in an index with the most granular, statistically

significant market area available.


Provides weighted repeat sales, and price-per-square-foot index models that use

multiple sale types, including single-family homes, multi-family homes and


About Clear Capital

Clear Capital (www.clearcapital.com) is a premium provider of data and solutions for real

estate asset valuation and risk assessment for large financial services companies. Our

products include appraisals, broker-price opinions, property condition inspections, value

U.S. Home Prices Continue Slight Decline

as West Region Drags Nation Down According

to the Clear Capital HDI Market Report Page 8 of 8

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