As Distressed Saturation Rates Rise Across the Nation, Are REOs in Vogue Again?
RENO, NV--(Marketwired - September 02, 2015) - Once a stain on housing, REOs and short sales are a reminder of the legacy of the housing downturn. Investors, seeking discount prices, transformed what was once undesirable into fashion-forward, instant cash flow in key markets. While in other markets, distressed inventory still hinders overall prices from getting a leg-up. With stocks plummeting last week and the global economic impact on our domestic economy and housing markets still unknown, distressed sales continue to be a critical market indicator. Just like in the fashion industry's iconic September issue, learn to be a trendsetter -- from stateside to Puerto Rico -- by letting distressed market measures give you full perspective of the market.
"Distressed saturation continues to be a challenge we face in today's housing market," says Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital®. "In fact, today's 'traditional' housing market continues to be defined by distressed saturation levels. In Act One, at the start of the downturn, distressed properties were an albatross around housing's neck. In Act Two, between 2011 and 2013, investors stepped in, buying, rehabbing and selling or renting distressed properties, which gave way to higher demand and rising prices.
"While the overall effect of higher rates of distressed saturation in Act Three of the recovery is unknown, one thing is clear; when it comes to housing, REOs and short sales are not a passing fad. Last week’s crash leaves the economy and housing tenuous at best, especially as we move from the promise of the summer buying season. The last third of the year will reveal whether the housing recovery can withstand broader global volatility. If investors pull out, oversupply of distressed inventory could bring us back to Act One. Or, a renewed source of distressed inventory could revive demand from investors and traditional homebuyers, alike, in an inventory-starved market. The driving factor will be whether traditional consumers will be willing, and more importantly, be able to participate. As the global and domestic economic outlook unravels, we will continue reporting on its effect on housing."
National and Regional Markets | ||||||
Market | Qtr/Qtr | Yr/Yr | Distressed Saturation | |||
National | 0.8% | 5.1% | 16.1% | |||
West | 1.2% | 7.3% | 11.7% | |||
Northeast | 0.2% | 2.1% | 14.0% | |||
South | 0.8% | 5.8% | 20.1% | |||
Midwest | 0.7% | 4.4% | 19.1% | |||
Chart 1. National and Regional Markets through August 2015. Source: Clear Capital® | ||||||
Highest Performing Major Metro Markets | ||||||||
Qtr/Qtr Rank | Metropolitan Statistical Area | Qtr/Qtr | Yr/Yr | Distressed Saturation | ||||
1 | San Jose, CA - Sunnyvale, CA - Santa Clara, CA | 2.1% | 9.3% | 4.0% | ||||
2 | Detroit, MI - Warren, MI - Livonia, MI | 2.1% | 13.2% | 17.6% | ||||
3 | Las Vegas, NV - Paradise, NV | 1.8% | 7.9% | 18.1% | ||||
4 | Denver, CO - Aurora, CO | 1.7% | 11.9% | 5.8% | ||||
5 | Seattle, WA - Tacoma, WA - Bellevue, WA | 1.6% | 10.4% | 10.9% | ||||
6 | Orlando, FL | 1.6% | 7.0% | 29.1% | ||||
7 | Miami, FL - Ft. Lauderdale, FL - Miami Beach, FL | 1.6% | 9.8% | 24.6% | ||||
8 | Dallas, TX - Fort Worth, TX - Arlington, TX | 1.6% | 10.3% | 3.8% | ||||
9 | Tampa, FL - St. Petersburg, FL - Clearwater, FL | 1.5% | 8.6% | 27.4% | ||||
10 | San Francisco, CA - Oakland, CA - Fremont, CA | 1.5% | 8.7% | 6.2% | ||||
11 | Charlotte, NC - Gastonia, NC - Concord, NC | 1.5% | 7.2% | 8.5% | ||||
12 | Portland, OR - Vancouver, WA - Beaverton, OR | 1.4% | 7.5% | 9.3% | ||||
13 | Atlanta, GA - Sandy Springs, GA - Marietta, GA | 1.4% | 8.9% | 15.7% | ||||
14 | Sacramento, CA - Arden, CA - Roseville, CA | 1.4% | 7.0% | 11.1% | ||||
15 | Jacksonville, FL | 1.3% | 8.2% | 28.7% | ||||
Chart 2. Highest Performing Major Metro Markets through August 2015. Source: Clear Capital® | ||||||||
Lowest Performing Major Metro Markets | ||||||||
Qtr/Qtr Rank | Metropolitan Statistical Area | Qtr/Qtr | Yr/Yr | Distressed Saturation | ||||
1 | Providence, RI - New Bedford, MA - Fall River, MA | -1.2% | -9.1% | 14.5% | ||||
2 | Baltimore, MD - Towson, MD | -0.3% | -2.3% | 24.9% | ||||
3 | Dayton, OH | -0.2% | 1.8% | 19.0% | ||||
4 | Rochester, NY | 0.1% | 1.6% | 8.3% | ||||
5 | Milwaukee, WI - Waukesha, WI - West Allis, WI | 0.2% | 5.2% | 15.9% | ||||
6 | Boston, MA - Cambridge, MA - Quincy, MA | 0.3% | 1.3% | 8.1% | ||||
7 | Cleveland, OH - Elyria, OH - Mentor, OH | 0.3% | 1.9% | 17.9% | ||||
8 | New Orleans, LA - Metairie, LA - Kenner, LA | 0.3% | 4.9% | 16.1% | ||||
9 | Washington, DC - Arlington, VA - Alexandria, VA | 0.4% | 2.1% | 12.6% | ||||
10 | Memphis, TN | 0.4% | 3.6% | 24.2% | ||||
11 | Oxnard, CA - Thousand Oaks, CA - Ventura, CA | 0.4% | 4.5% | 8.5% | ||||
12 | Richmond, VA | 0.6% | 5.2% | 13.7% | ||||
13 | Philadelphia, PA - Camden, NJ - Wilmington, DE | 0.6% | 3.3% | 16.4% | ||||
14 | Houston, TX - Baytown, TX - Sugar Land, TX | 0.6% | 9.2% | 3.3% | ||||
15 | Raleigh, NC - Cary, NC | 0.6% | 4.3% | 6.3% | ||||
Chart 3. Lowest Performing Major Metro Markets through August 2015. Source: Clear Capital® | ||||||||
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