Metropolitan areas hit the hardest by foreclosures, such as Las Vegas, Chicago, Miami and Detroit, have shown the greatest increase in sales since last year. Radar Logic suggests that fears of a double dip in housing prices may be delaying some home purchases. See the following article from HousingWire for more on this.
House prices remained flat in February on both a month-over-month and year-over-year basis, according to the Radar Logic Residential Property Index (RPX).
The 2% increase in the Western region RPX composite balanced the 2% decline in the Northeast and South RPX, keeping prices stable overall from last month. Transactions grew the most since last year in metropolitan areas that are hardest-hit with foreclosures, Radar Logic said, including Las Vegas, Chicago, Miami and Detroit.
Sales at foreclosure auctions and real estate owned (REO) sales rose slightly as a percent of total transactions, while the composite price for distressed sales came in 38% lower than other sales. During the 4 weeks ending January 18, 29% of home sales were distressed sales. In the four weeks ending February 18, 30% of home sales were distressed sales. The increase in distressed sales as a percentage of total sales was the result of a 20% increase in distressed sales combined with a 12% decrease in all other sales.
Radar Logic noted potential buyers could delay their plans to purchase a house out of concern that the ongoing flood of foreclosures will trigger a double dip in prices. The company warned that fears of a double dip could be self-fulfilling if demand declines to the point where it can no longer keep pace with foreclosure-driven supply.
Radar Logic said its data does not indicate that a second nationwide decline in home prices is under way. The company called February results “more up-beat” than any other February results since the peak of the housing boom.
“We believe that low home prices and low mortgage rates will continue to spur sufficient housing demand to absorb foreclosure-driven increases in supply at current price levels,” said Quinn Eddins, Radar Logic’s director of research. “Nevertheless, we will watch foreclosure rates and sales activity closely in the coming months for signs of flagging homebuyer confidence.”
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