For Housing, an October to Forget
Housing markets in key major metropolitan areas endured their worst Oct. in at least eight years -- and perhaps longer, as the number of distressed property sales managed to push recorded home prices downward further and a number of key MSAs saw sales volume drop sharply. According to a report from New York-based real estate data and analytics firm Radar Logic, Inc., released Tuesday morning, home prices and sales volumes decreased more in Oct. 2008 than in any other Oct. since the company's data set began in Jan. 2000. Home prices among the company's 25-city MSA index fell fell 2.7 percent in October alone, the largest decline recorded by the company. Five MSAs saw their largest month-over-month price declines, Radar Logic said in a press statement, while 13 MSAs saw their largest year-over-year declines. Home sales across the 25 MSAs tracked by the firm declined by 14.9 percent during October, but sales in Sun Belt cities remained elevated relative to Oct. 2007 as "motivated sales" grew rapidly, weighing heavily on prices. As a result, eight of the ten MSAs with the largest year-over-year increases in sales volume were also among the ten MSAs that experienced the greatest year-over-year price declines. Motivated sales refer to foreclosure auction sales and liquidity-driven sales by financial institutions and foreclosure service firms. The New York firm's data is the basis for the Residential Property Index, or RPX, used as the basis for futures trading in housing markets; the company's pricing metrics are normalized to price-per-square foot. "Motivated sales continue to be a major factor in most markets tracked by the RPX," said Michael Feder, CEO of Radar Logic. "Until action, if any, out of Washington becomes clear, it is difficult to know if this is a long-term phenomenon or if it will work its way through and, as a result, prices will begin to recover." For the fourth month in a row, Milwaukee, WI was at the top of the 25 MSAs tracked by the firm in October. Home prices in Milwaukee were 5.3 percent higher than they were a year before, making Milwaukee the only MSA tracked by Radar Logic to experience year-over-year price appreciation in October. San Francisco was at the bottom of the rankings, in contrast, with 34.4 percent year-over-year price decline per-square-foot. Detroit, Las Vegas, Phoenix, San Diego and Seattle saw their largest month-over-month price declines since January 2000, as well, Radar Logic said. Some good news? If there was any, it's this: while motivated sales have grown a whopping 193 percent across the 25 MSAs tracked by the firm between Jan. 1 and Oct. 31, the rate of growth slowed over the first three quarters and actually turned negative in October, when 18 of 25 MSAs saw motivated sales decrease. Slower growth in distressed property sales could portend some help for housing prices, considering that the composite price for motivated sales was between 32 percent and 39 percent lower than the composite price for other sales. But it's unclear just how much of that slowing rate reflects voluntary or involuntary foreclosure moratoria that were just beginning to take effect three months ago. Write to Paul Jackson at firstname.lastname@example.org.