Data firm takes a dimmer view of future market

First American CoreLogic says it expects a softer housing recovery than in its previous forecasts.  The mortgage data firm, which issues a monthly LoanPerformance Home Price Index (HPI), declared:

Our forecasts for the inventory of homes for sale have risen as interest rates are expected to rise, tax credits expire, and slower than expected sales over the winter due to the weather are all adding to the inventory. Collectively these effects act to contract demand (put downward pressure on prices).

After a modest increase this spring and summer, CoreLogic projects a decline in the national single-family combined index of 3.4 percent from February 2010 to February 2011, assuming the expiration of current Federal Housing Stimulus programs.

Twenty-nine of the 45 largest Core Based Statistical Areas (CBSAs) are projected to experience continued price depreciation on a year-to-year basis, according to the current forecast, the firm now says.  That number compares only 14 out of the 45 in last month’s forecast.

Tables of year-to-year changes in February and 12-month forecast by region. Click to expand (PDF).

First American CoreLogic made the following predictions as well:

  • Markets that are expected to experience the largest amount of price depreciation through February 2011 are Detroit (-16.4 percent), Seattle (-5.8 percent), Atlanta (-4.5 percent), Cleveland (-4.1 percent) and Indianapolis (-3.8 percent).
  • Markets that are expected to experience the biggest appreciation are Denver (5.2 percent), Las Vegas (5.0 percent), Riverside, Calif. (3.0 percent), and Houston (3.0 percent).
  • The preponderance of distressed sales continues to exert downward pressure on the indices.
  • When distressed sales are excluded from the data, the forecast becomes significantly more optimistic about the future direction of home prices outside of this market segment.

The firm projects that the national HPI will increase 4.9 percent year-to-year when distressed sales are left out its analysis. The same is true of many states and CBSAs.  For example, there is a 10-percentage point difference in the year-to-year HPI forecasts for California when distressed sales are included (-1.8 percent) compared with when they are not (8.0 percent.)

Regarding New York City, note that the forecast relates only to single-family homes.  In Manhattan, such homes are minuscule segment of the market.  Moreover, like Case-Shiller’s numbers, CoreLogic’s cover a wide area.

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248
F: 347-438-3201
Web site

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