Strong Homebuyer Traffic, Rising Home Prices Fail to Lift
Market for Damaged REO, New HousingPulse Survey Finds

 WASHINGTON, DC (February 26) – Strong homebuyer traffic and limited housing inventory continued to push overall home prices upward in January. But the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey results also reveal a growing divergence between prices for non-distressed properties and prices for damaged real-estate owned or REO.

 While HousingPulse data shows that home prices overall, based on a three-month moving average, are at the highest level – $236,100 – seen in nearly three years and have been climbing since last spring, those average numbers don’t tell the complete story when it comes to home price trends.

 Yes, home prices are on the rise for non-distressed properties, which accounted for 65.0 percent of total home purchase transactions tracked by HousingPulse in January. In fact, average home prices for non-distressed properties were up a healthy 5.1 percent on a year-over-year basis – rising from $264,700 in January of 2012 to $278,200 in January of 2013.

 But no, home prices for REO properties in need of repair – the type banks look to unload after a foreclosure – have not been rising along with prices for non-distressed properties. They have been moving in the opposite direction.

According to HousingPulse results, the average price for a damaged REO property sold in January was just $88,100. That was not only 17.1 percent below the average damaged REO price recorded a year ago – $106,300 – but also the lowest level ever recorded by HousingPulse in its four-year history.

One reason for the decline in home prices for damaged REO is the fact that both current and first-time homebuyers have reduce their interest in this type of property for the better part of the past year. HousingPulse results for January show current homeowners with a record low 15.0 percent share of the damaged REO purchase market, while first-time homebuyers had a near-record low share of 19.6 percent.

Meanwhile, investors, lured by low prices and the growing opportunities for flipping, have significantly increased the purchase share of damaged REO properties in recent months. During January, investors accounted for 65.4 percent of damaged REO home purchases, according to HousingPulse numbers. That was up from 58.1 percent a year earlier and the highest level recorded in the survey’s four-year history.

The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey involves approximately 2,500 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.

For more information on the survey, contact John Campbell at Campbell Surveys at (202) 363-2069 or .

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2/26/2013