As real estate-owned properties continue to plague the national housing market, a recent report found that it caused overall home prices to decrease in February.
According to real estate data firm Clear Capital, home prices in February declined 1.9 percent on an annual basis. However, although year-over-year prices fell lower, the company's Home Data Index indicated that short-term prices have remained stable, despite lenders revamping the foreclosure process. Since the fourth quarter of 2011, home values were reported to have slipped just 0.6 percent in February.
"With this uptick in REO activity, we’ll be keeping a very close eye on the effects of the attorneys general settlement with servicers, as it could dramatically change the flow of REO properties moving through the foreclosure process and significantly impact values in the near future," said Clear Capital director of research and analytics Alex Villacorta.
Meanwhile, despite REO saturation, the report found that the 15 best performing metropolitan statistical areas remained steadfast against the increasing presence of distressed properties. It was found that six of them had home value appreciation of more than 2 percent, while the lowest performing MSAs saw home prices fall at an average of 4.1 percent in February on an annual basis. The previous month, average depreciation in these cities was recorded at 4.7 percent.
Regionally, declines in home prices were recorded in all areas. In the West, home prices fell 0.4 percent on a quarterly basis in February, while total REO saturation was at 32.1 percent. In addition, the Midwest was the hardest hit with an REO saturation rate of 32.2 percent, causing property values to fall 1.8 percent during the same period.
Meanwhile, prices in the Northeast edged 0.1 percent lower, after recording a REO saturation rate of 8.8 percent. Additionally, the South reported home prices dropping 0.2 percent, after 23.7 percent REO saturation.
However, despite the marginal short-term declines, Clear Capital noted that the economy should see improvements in the job market, as well as an increase in consumer confidence, during the course of 2012. These two factors could work to put upward pressure on real estate prices, as the industry works through its distressed property inventory.