RECORD LOW HOME PRICES IN DECEMBER
Despite an increase in new and existing home sales, home prices in 2010 slumped to their lowest point in December, according to a recent report by mortgage technology company FNC.
The FNC Residential Price Index (RPI) attributes the decline in part to increased sales of foreclosed properties, and higher foreclosure-sales discounts. According to the index, home prices declined for the seventh straight month in December, ending the year with the biggest one-month drop as well.
Sales of distressed properties have increased steadily over the past year despite the temporary foreclosure moratoriums during the fourth quarter. Sales rose from 23.5 percent in the second quarter of 2010, to 25.5 percent in Q3, to 26.8 percent in Q4.
At the same time, the foreclosure sales discount increased from about 36.5 percent in the second quarter to 39.2 percent in the third, and 40.8 percent in the fourth quarter.
December home prices are down more than 3.4 percent from January 2010.
The RPI tracked 30 major metropolitan markets and found that 23 of the markets experienced declines averaging 2.2 percent.
“Home prices in Atlanta, Chicago, Las Vegas, Orlando and Phoenix continue to drop rapidly year-over-year at rates in the double digits,” said a statement released by the company. “Meanwhile, San Diego, Los Angeles, and San Francisco markets have been among the best performing markets during the year, rising 5.1 percent, 7.8 percent, and 8.1 percent, respectively, from a year ago.”
It continued, “The three California markets continue to enjoy strong year-over-year growth despite the absence of a tax credit in the second half of the year – a stark contrast to many faltering recoveries among markets where the median price decline stood at about -2.9 percent.”
FNC expects more price declines in the coming months, but says there is an upside: “this trend will reduce the surplus of distressed properties and eventually bring the supply to levels in line with weak housing demand, paving ways for a more sustainable housing recovery later,” the company said.
SOURCE: Joy Leopold, DSNEWS.com
