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St. Louis Real Estate Search

 

Record Foreclosure Rate Could Hurt Demand For Homes and Slow Recovery

Dennis Norman

In a report just issued by Radarlogic there is some good news for the housing industry as in the report Michael Feder, President and CEO of Radar Logic, states “the evidence continues to support the view that housing has stabilized and is in the early stages of recovery.” However, the report also reminds us that RealtyTrac reported that foreclosure filings set a record in March, with filings reported on 367,056 properties, the “highest monthly total since RealtyTrac began issuing its report in January 2005. The report indicates an increasing concern about the threat that foreclosures pose to housing demand, and thus to a timely recovery of the housing market.

radar logic“We believe that low home prices and low mortgage rates will continue to spur sufficient housing demand to absorb foreclosure- driven increaseses in supply at current price levels,” said Quinn Eddins, Readar Logic’s Director of Research. “Nevertheless we will watch foreclosure rates and sales activity closely in the coming months for signs of lagging homebuyer confidence.”

Highlights from the report include:

  • Of the 25 Metro Areas covered by the report, St. Louis ranked 10th in terms of year-over-year price change with a loss of 0.3 percent and ranked 10th in month-over-month price change with a loss of 2.8 percent (see chart below)
  • In year-over-year change in terms of number of home sales, St. Louis ranked 22nd with an 11.9 percent increase and ranked 18th in month-over-month change with a 9.4 percent increase in number of transactions.
  • The 25-MSA RPX Composite price remained flat in February on both a month-over-month and year-over-year basis. The horizontal price movement represents the best one-month price trend for the month of February since 2007. The three-month price trend ending February 2010, while negative, marked an improvement over steep February declines in 2008 and 2009.
  • The stability in the 25-MSA RPX Composite price from January to February 2010 was driven by increases in the RPX prices for western MSAs. The RPX composite price for the western region increased 2% in February on a month-over-month basis, while the RPX prices for the Midwest, Northeast and South each declined 2%.
  • The 25-MSA transaction count increased 37% between February 2009 and February 2010. As can be seen in Exhibit 3, this was the first year-over-year increase during the month of February since 2005. The 25-MSA RPX transaction count increased 16% month over month. In absolute terms, this one-month trend was similar to the February gains in 2006 through 2009. The three-month transaction count trend was more negative than it has been in years due to the large and rapid decline in transactions in December and January.
  • On a year-over-year basis, transactions increased the most in MSAs that have been hit hardest by foreclosures: Las Vegas, Chicago, Miami and Detroit (please see Exhibits 9 and 14). The RPX transaction count for Las Vegas has increased almost 300% since February 2009. The largest month-over-month increases in sales activity occurred in Southern California, with Los Angeles and San Diego both exhibiting 39% gains in transaction counts.

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