Yes, home prices are still going down, but not in the areas we’ve come to associate with the housing bust. Now, it’s the Midwest that’s experiencing the worst of the slump, while places like Phoenix and Orlando are actually seeing price increases. That’s the surprising news imbedded in Clear Capital’s latest Home Data Index.
In Orlando, prices increased by 1.8 percent over the previous quarter, and a whopping 6.7 percent over the year before, making it the fifth-best performing market in the nation.
Most people remember Florida as a real estate disaster zone not long ago. What caused the turnaround? As we pointed out in a Orlando has become a haven for short sales, which comprised over 73 percent of all sales there as of November 2011.
Short sales are up, and REO sales are down: Clear Capital’s data shows Orlando’s REO saturation hitting a relatively low 25.2 percent. (By contrast, the Detroit metropolitan area, which leads the nation in price drops, has 51.8 percent REO saturation. The Atlanta area—third worst market for price decreases—showed an REO saturation rate of 42.9 percent.
Clearly, REO’s are bad for home values—no surprise there. But short sales in these distressed areas are actually good. And that’s good news for (almost) everybody.
Have the banks got that message? You can be sure they’re paying attention. The big incentives they’ve provided to induce homeowners to short sell are paying off—in places like Orlando. Expect to see lots more of that in the coming months.
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