Second Quarter Residential Real Estate Gains Prove Promising

Nationwide real estate real estate prices increased by an average of 7.9% in the second quarter of 2010, according to a report released by the Clear Capital Home Data Index. While prices and activity remain volatile, the news is still plenty welcome to those in the real estate industry, ranging from commercial real estate agents to residential lease professionals to contractors to developers. Perhaps even more importantly, it is one more sign of hope that America will not experience a double dip recession, as some analysts have feared.

More good news came from the fact that bank owned real estate inventory has decreased, down 20% to a national figure of 22.7% of all real estate for sale.

Western cities experienced the most consistent, albeit modest, gains in local real estate markets, up from minus 1.6% at the start of the year to plus 2.7% in the last quarter. Elsewhere, gains were stronger, but also less consistent and far more volatile. The South started the year at minus 4.2%, and finished the second quarter at plus 7.0%, while the Northeast sat similarly at minus 4.4% and plus 6.9%, respectively.

Not surprisingly, some of the hardest-hit cities were the ones who showed the largest turnaround. Memphis, Cleveland, and Charlotte all experienced double-digit increases in both residential real estate and residential lease prices, Cleveland by nearly 30%.

Only four cities continued to show a price decline from this time last year: Seattle, Portland, Baltimore, and Birmingham. Still, Baltimore’s quarterly price figures rose from minus 1.8% to plus 2.9%, which bodes well for its projected recovery.

Year-over-year improvement nationwide currently sits at 8.1%, nearly all of which was contributed by this last quarter’s residential lease and home price growth. July’s growth was slower, however, which leads many analysts to believe that the average price improvement is slowing.

Several senior statisticians from Clear Capital have gone on the record to state that they believe the momentum created by the homebuyer tax credit has continued to be effective in spurring real estate price growth. But until private sector jobs start appearing en masse, the consensus remains that homebuyer and residential lease market growth will remain slow.