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REO PRICES INCREASE, FAIR MARKET PRICES DROP, HOME VALUES STABILIZING According to data from Clear Capital, over the last year, REO prices increased 5.5 percent while fair market prices dropped 2.9 percent. The real estate data provider explained that high demand for REOs, particularly from investors, most likely caused the increase in prices and named Carrington Holding Company, Amherst Securities Group, and Waypoint Financial as examples of investors purchasing single-family REOs with the purpose of converting them into rental properties. "There has been quite a bit of buzz in the housing industry surrounding turning REOs into rentals. Our data suggests early activity from these programs could be starting to take effect with national REO-only home price gains on a price per square foot basis vastly outpacing fair market prices on a national level," said Dr. Alex Villacorta, director of research and analytics at Clear Capital. According to data from the Census Bureau, rental vacancy rates also saw a steep decline with the rate at 8.8 percent in the 2012 first quarter, a significant decline from the 2010 first quarter when the vacancy rate was 10.6 percent. Villacorta says if investor interest continues to expand REO-to-rental programs over the next several months, it could have a significant impact on the market in terms of increasing home values. REO saturation, or the portion of REO sales relative to total sales, increased on a quarterly basis in April for the third straight month. Nationally, REO saturation increased quarterly from 25.3 percent in December 2011 to 27.9 percent in April 2012. The Midwest regions saw the greatest quarterly increase of REO saturation, from 31.1 percent in December to 37.1 percent in April. In the West, REO saturation increased from 31 percent to 33.3 percent during the same quarterly period, and in the South, saturation increased from 24.2 percent to 25.3 percent. In the Northeast, REO saturation remained low compared to other regions; the region posted a quarterly increase from 8.4 percent to 10.2 percent. Presenting further evidence that the housing market may stabilize, Clear Capital released its Home Data Index (HDI), which showed that, overall, home prices fell 0.2 percent on a quarterly basis and 1 percent yearover-year. The data gathered was good through April 2012, and the HDI includes both fair market and REO transactions. Based on regions, the Midwest was the only one that posted a quarter-over-quarter loss with home values declining 2.7 percent. The West (+0.5 percent), Northeast (+0.2 percent), and South (+0.6 percent) all posted small quarterly gains. Year-over-year, all regions posted losses except for the Northeast, which saw a 0.7 percent increase. DS News is the only publication in the country solely dedicated to providing default servicing professionals with news and content focused on their industry. SUBSCRIBE NOW! Call 214.525.6734 or connect with us online at DSNews.com. 34