California Home Values Improving, Foreclosure Activity Declining

California Home Values Improving, Foreclosure Activity Declining

BY: ASHLEY R. HARRIS

Pro Teck Valuation Services released the company’s October Home Value Forecast (HVF) Thursday, and the data shows that California isn’t a black eye on the market anymore. The HVF update also examines the impact of state judicial and non-judicial foreclosure proceedings on the housing recovery in many markets across this country.

“Two years ago much of the bad news was centered on California, a non-judicial state. Foreclosures were driving down prices and there were high REO discounts,” said Tom O’Grady, CEO of Pro Teck Valuation Services. “But banks moved swiftly to cut losses, peak foreclosure activity came and went, and many markets are now on the rebound. In fact, eight of our top ten metros for this month are in California.”

This month’s HVF update also includes a listing of the 10 best and 10 worst performing metros as ranked by its market condition ranking model. The rankings are run for the single family home markets in the top 200 CBSAs on a monthly basis to highlight the best and worst metros with regard to a number of leading real estate market indicators, including: sales/listing activity and prices, months of remaining inventory (MRI), days on market (DOM), sold-to-list price ratio, and foreclosure and REOactivity.

“Our top ten metro list in October is dominated by California, but all are showing impressive numbers. Each have less than four months of inventory and are averaging more than 20 percent year-over-year appreciation,” O’Grady said.

“Of importance is the foreclosure as a percent of sales indicators–all are under 10 percent,” he added.

O’Grady says that supply-demand market fundamentals have returned, which should help lead to a sustainable recovery. The metro areas ranked are in non-judicial states.

He notes the difficulty of sustaining a market turnaround when 25 to 50 percent of sales are foreclosures. When foreclosures represent a significant share of total sales and their discounted prices pull down the prices of non-distressed sales, it is known as the “contagion effect,” according to O’Grady.

“This month, that’s what is happening in our bottom ten metros, which also happen to be in judicial states,” O’Grady said.

He notes that even though other market fundamentals are looking good, such as recent price appreciation and shrinking inventories, foreclosures are “still playing a major part in holding these real estate markets back.” Foreclosures must play a less active role in the market, O’Grady says.

October’s top CBSAs include:
Modesto, California
Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
Sacramento-Arden-Arcade-Roseville, California
Los Angeles-Long Beach-Glendale, California
Santa Rosa, California
Oxnard-Thousand Oaks-Ventura, California
San Diego-Carlsbad, California
Anaheim-Santa Ana-Irvine, California
San Francisco-Redwood City, California
San Rafael, California

The bottom CBSAs for October were:
Orlando-Kissimmee-Sanford, Florida
Palm Bay-Melbourne-Titusville, Florida
Rockford, Illinois
Port St. Lucie, Florida
Pensacola-Ferry Pass-Brent, Florida
Miami-Miami Beach-Kendall, Florida
Lake County-Kenosha County, IL-Wisconsin
Tampa-Clearwater-St. Petersburg, Florida
Daytona-Daytona Beach-Ormond Beach, Florida
Cape Coral-Ft. Myers, Florida

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