The recently released Clear Capital (www.clearcapital.com) monthly Home Data Index™ (HDI) Market Report reported on the hottest real estate markets and the worst in the U.S. I guess I wasn’t expecting the Detroit area to be in the first bracket, but I also wasn’t thinking that we’d be the worst – the market that continues to have the highest devaluation of homes in America – but there we were.
Now, the Clear Capitol report defines the Detroit area market as Detroit, Livonia and Warren, so I guess there’s some wiggle room for me to say, “Yeah, but that’s not Milford.” But the point of the report is that our whole area continues to suffer home value declines. In the report the Detroit metro area is shown as suffering a 13.2% Quart over Quarter drop and a 12.6% Year over Year drop compared to 2010. The report also shows what they call the REO saturation point (the % of homes sold that are foreclosures) as 58% - the highest rate on the charts.
The report continues: Midwest markets of Detroit, Cleveland and Columbus continue to be hit particularly hard, posting three of the largest quarterly price declines. The nationwide uptick in distressed home prices were absent in these three markets. REO saturation rates well above 40 and 50 percent (Detroit, 58.0%; Cleveland, 44.3%; Columbus, 45.6%) pushed these markets to double-digit quarter-over-quarter home price declines.
My own data out in my little market area tends to agree with the saturation percentage, at least in some of the markets that I cover. So far in June, the Highland market is running at 70% distressed sales (I define distressed as foreclosures and short sales, the majority of which are foreclosures right now). Milford is at 60% so far, with Commerce Township running at 50%, West Bloomfield at 48% and White Lake at 46%. However, the median sold values charts in most of those areas show an increase the last couple of months, which says that more expensive distressed homes are selling now.
The report talks of an average forecast value loss in the midsection of the country of about 8% for this year, as compared to double digit losses in the past and I think I can agree with that figure. We seem to be losing value at a slower rate this year. The bleeding hasn’t stopped, but it has slowed. Of course that could be that we’re running out of blood, too.
The report doesn’t try to explain the root causes of the continued decline other than some generalities about the auto industry problems and continued high unemployment rates in the rust-belt states. I’d certainly add that FUD (Fear, Uncertainty and Doubt) still reins in Michigan, even with Captain Sunshine as governor.
So here we are again – worst in the nation, again. At least we have no where else to go but up, once we stop falling.