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33 » VISIT US ONLINE @ DSNEWS.COM PRICE GAINS TO DIMINISH AS REO INVENTORIES DISSIPATE On the heels of two other home price reports, CoreLogic released the CoreLogic Case-Shiller Indexes for the third quarter of 2013, reporting an 11.2 percent annual price gain at the national level. e S&P Case-Shiller Home Price Indices and the Black Knight Financial Services Home Price Index both reported monthly price gains in November. e CoreLogic Case-Shiller indexes track home price movement on a quarterly basis in more than 380 metro markets across the country. CoreLogic anticipates a substantial decel- eration in home price gains this year. In fact, the firm predicts home price gains will fall just below the long-term historical norm of 4.5 percent appreciation annually, which has been maintained since 1975. Home prices are expected to rise 4.2 per- cent from the third quarter of 2013 through the third quarter of 2014, according to CoreLogic. "Double-digit price gains are unlikely to persist, but since housing is far more affordable now than it was in 2006, there is less concern that a new housing bubble will occur," said David Stiff, principal economist for CoreLogic Case-Shiller. Despite home price gains and rising interest rates, Stiff says as of the third quarter, the na- tional median mortgage payment as a percentage of median family income was at a 40-year low. e ratio was 35 percent lower than it was at the height of the housing bubble, according to Stiff. e large metro areas—those with 950,000 or more residents—with the greatest annual price gains in the third quarter were Las Vegas, Nevada (30 percent); Sacramento, California (27 percent); and Riverside, California (26 percent). California markets made up six of the top 10 markets with the highest price gains year- over-year in the third quarter. For example, Sacramento's 27 percent gain reported in the third quarter will fall to a 3.8 percent gain over the following 12 months, according to CoreLogic. e smallest price appreciation year- over-year in the third quarter took place in Philadelphia, Pennsylvania (3 percent); Hartford, Connecticut (3 percent); and New Orleans, Louisiana (3 percent). While California and Arizona markets continued to post high price gains in the third quarter, Stiff anticipates a shift in these mar- kets as their REO inventories dissipate and investor demand dissolves along with it. "Investor demand and sales of foreclosed properties are dropping quickly," Stiff said. "Non-investor demand, although increas- ing, will not replace demand from investors," he said. Looking ahead, CoreLogic anticipates the greatest price appreciation occurring through the third quarter of this year in Oakland, California (9 percent); New Orleans, Louisiana (9 percent); and Fort Worth, Texas (9 percent). e smallest gains are expected in the Southern markets of Nashville, Tennessee (2 percent); Orlando, Florida (3 percent); and Jacksonville, Florida (3 percent). Home Flipping Ramps Up in 2013 All data points to a continued decline in foreclosure stock last year, but that didn't stop home flippers from stepping up their game. According to RealtyTrac's Year-End and Q 4 2013 Home Flipping Report, single-fam- ily home flips—in which a home is purchase and sold again within six months—totaled 156,862 last year, up 16 percent from 2012 and 114 percent from 2011. According to the company, home flips accounted for 4.6 percent of all single-family home sales in 2013, up from 4.2 percent the prior year and 2.6 percent in 2011. In the fourth quarter alone, flips made up 3.8 per- cent of sales, a decline from 3.9 percent in Q 3 2013 and 7.1 percent in Q 4 2012. e average gross profit for a home flip last year was $58,081, up nearly $13,000 from the 2012 average. "Strong home price appreciation in many markets boosted profits for flippers in 2013 despite a shrinking inventory of lower-priced foreclosure homes to purchase," said Realty- Trac VP Daren Blomquist. According to Blomquist, 21 percent of all properties flipped last year were purchased out of foreclosure, down from 27 percent in 2012. "Meanwhile, flipped homes were still purchased at an average discount of 13 percent below market value in 2013, the same average discount as 2012, indicating that investors are finding discounted buying opportunities outside of the public foreclosure process— particularly in those markets with the biggest increases in flipping for the year," he added. One of those markets was Virginia Beach, which saw flipping activity jump 141 percent compared to 2012. Also more active were Jacksonville, Florida (+92 percent); Baltimore, Maryland (+88 percent); Atlanta, Georgia (+79 percent); and Richmond, Virginia (+57 percent). Meanwhile, a number of once-popular investment markets reported some of the most significant decreases in home flipping, including Phoenix, Arizona (-32 percent); and Sacramento, California (-5 percent).

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