Clear Capital: Home prices double-dip into 'uncharted territory'
Home prices double-dipped in April, dropping 0.7% below the previous low in March 2009, according to analytics firm Clear Capital. Prices first reached a new low in California in March. But in April national prices fell 5% below levels measured one year ago and decreased 4.9% from the previous three months. National home prices sank 11.5% over the previous nine-month period, a decline not seen since 2008, Clear Capital said. "Markets have entered uncharted territory," Clear Capital said. Every major metropolitan statistical area showed a drop from the previous three months. While spring brings hope of a traditional turnaround, this will be the first homebuying season spent without the homebuyer tax credit since 2008. The major hurdle is the amount of distressed property on the market. REO sales account for 34.5% of overall activity nationwide after declining to nearly 20% in the middle of 2010, according to Clear Capital. This same pattern surfaced in 2008, when REO saturation grew from 20% to 32% by the end of the year. "The latest data through April shows a continued increase in the proportion of distressed sales that are taking hold in markets nationwide," said Alex Villacorta, director of research and analytics at Clear Capital. "With more than one-third of national home sales being REO, market prices are being weighed down as many markets have not regained enough footing to withstand the strain of the high proportion of REO sales." Clear Capital looked at the home prices trends in 2008 and found similar patterns in 2011. But the stimulus quickly reversed the movement in 2008. Home prices, as of April, are down 25% since the 2008 period. Unlike the last downward push, this one heads into the buying season, which could push prices higher, Clear Capital said. And the market faces many challenges that can only be solved through more sales. "In light of the compounding effects of winter's seasonal slowdown and increased distressed sale activity, the market now faces the true test of whether prices can rebound in the historically active spring season," Villacorta said. Write to Jon Prior. Follow him on Twitter @JonAPrior.