NEW YORK (MainStreet) – It’s hard to find a silver lining in the dismal reports from the housing market these days, but a closer look at the latest price study shows that prices for “non-distressed” properties may be stabilizing.
The numbers suggest that homebuyers should carefully assess risks and opportunities on a neighborhood by neighborhood basis, as stability can change from one location to another.
The study, by housing data monitoring firm CoreLogic, shows that nationwide home prices declined by 6.7% from February 2010 to February 2011, the seventh monthly decline in a row. But the overall figure is heavily influenced by the plunging prices for “distressed sales” such as foreclosures, short sales and other “real-estate owned” properties, or REOs.
When the distressed sales are removed from the data, CoreLogic finds the average home price fell only 0.1% in the year ending in February. Typically, such distressed properties are cases where the homeowner has stopped making payments, usually causing the lender to take over the property and dump it on the market at fire-sale prices.
In one of the most dramatic local examples of the trend, overall home prices fell by 10.4% in the Chicago-Joliet-Naperville, Ill. area, but dropped only 0.4% with distressed sales excluded. In Florida, overall prices dropped 11.2%, but only 0.8% when excluding distressed sales. In West Virginia, overall prices actually went up, by 5.4%. Excluding distressed sales, prices there jumped an impressive 8.2%.
“When you remove distressed properties from the equation, we’re seeing a significantly reduced pace of depreciation and greater stability in many markets,” said CoreLogic chief economist Mark Fleming. “Price declines are increasingly isolated to the distressed segment of the market, mostly in the form of REO sales, as the stock of foreclosures is slowly cleared.”
Many prospective homebuyers are waiting for the market to stabilize, as no one wants to buy a home only to discover it is worth thousands less a year later.
But some people, such as those relocating for a job, have little choice but to buy now, unless they find an abundance of appealing, affordable rental properties in their neighborhoods of choice. Of course, buyers with a speculative streak see a falling market as a buying opportunity.