“Why is quarterly home price
growth now falling at such a rapid pace?
According to Alex Villacorta, vice president of research at Clear
Capital:
‘With waning investor demand
[see chart below], higher rates of distressed sale activity mean that the
housing market must withstand these distressed sales, which account for nearly
one in four transactions.
‘Since the market fallout in
2006, home prices dramatically declined during sustained periods of rising
distressed sales activity. Over the last
two years, however, rising distressed sales have been offset by investor
demand, which is not guaranteed to be present in 2014.’
“Despite the big fall in
investor demand that occurred in January 2014, please note that it is not
unusual to see rising levels of distressed sales activity during the winter
months. However, as I explained in my
January 2014 Timing Letter, Existing
Home Sales – which is the best leading indicator of future housing market price
trends – continues to signal a weakening housing market.”
