Real Estate Journal Online

While the commercial sector of the real estate market appears to have avoided the dreaded “double dip,” at least a portion of the United States may not be so lucky. According to data released by Clear Capital on Thursday, home prices in the western U.S. are down 4.3 percent in just the first quarter of 2011[1]. Interestingly, in the same report the firm argues that negative forecasts for the rest of the country have been “overstated” and predicts that the state of the markets in the Midwest, South and Northeast are actually “encouraging,” albeit not incredibly promising for the immediate future.

Alex Villacorta, Clear Capital’s director of research and analytics, believes that the difference between the western U.S. and the rest of the country is that REO saturation in these states is still accelerating, while elsewhere the levels of REO saturation are remaining stable. REOs pull housing prices down, he explains, and “will likely void any gains in the West.” In the rest of the country, the firm predicts that prices will “flatten” over the course of 2011, laying the groundwork for a recovery in the following years[2]. Not surprisingly, however, all of these predictions are being made with the caveat that “real estate is a local issue” and that one market can vary dramatically from another. We have seen evidence of this clearly in the Washington D.C. and New York City markets, where growth and appreciation are far more common than anywhere else in the country.

Do you think that the western U.S. is headed for a double dip? If so, are you going to invest and try to get in on “the bottom” or steer your investments elsewhere?

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[1] http://www.dsnews.com/articles/clear-capital-says-home-prices-in-west-now-double-dip-2011-04-06

[2] http://www.marketwire.com/press-release/Clear-Capital-Home-Data-Index-First-to-Identify-Home-Price-Double-Dip-in-the-West-1424004.htm