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THE LATEST ANALYTICS Home Prices Advance for Third Straight Month The summer buying season presses on, as CoreLogic reports findings that demonstrate improvements for home pricing. F Logic's May Home Price Index (HPI) report. When including distressed or the third month in a row, home prices posted both yearly and monthly gains, according to Core- sales, home prices increased 2 percent in May 2012 from May 2011 and moved up by 1.8 percent month-over-month. When excluding distressed sales, prices made even greater strides, with the year-over-year increase at 2.7 percent and month- over-month increase at 2.3 percent. Distressed sales include short sales and REO transactions. "The recent upward trend in 5.7 percent from a year ago, compared to only a 1.8 percent increase for prices 125 percent or more of the median," said Fleming. When including distressed U.S. home prices is an encour- aging signal that we may be seeing a bottoming of the hous- ing down cycle," said Anand Nallathambi, president and CEO of CoreLogic. "Tighter inven- tory is contributing to broad, but modest, price gains nationwide and more significant gains in the harder-hit markets, like Phoenix." The CoreLogic Pending HPI sales, the five states with the greatest increases were Arizona (+12 percent), Idaho (+9.2 percent), South Dakota (+8.7 percent), Montana (+8.2 percent), and Michigan (+7.9 percent). The states that posted the greatest losses were Delaware (-9 per- cent), Rhode Island (-4.4 percent), Illinois (-4.2 percent), Alabama (-4.1 percent), and Georgia (-4 percent). When excluding distressed Will 2013 Mark the End of the Housing Crisis? It may be wishful thinking, but at least one industry group expects for next year to mark the "bottom" for U.S. housing. points to another monthly gain in June. Prices were expected to increase that month by 1.4 per- cent when including distressed sales and, when excluding distressed sales, were expected to rise by 2 percent. Mark Fleming, chief econo- sales, Montana (+9.1 percent) posted the greatest gain, followed by South Dakota (+8.5 percent), Arizona (+7.3 percent), Idaho (+6.6 percent), and Wyoming (+6.6 percent). On the other hand, Delaware saw prices decrease by -7.8 percent, with Rhode Island (-3.8 percent), Alabama (-2.8 per- cent), Connecticut (-2.2 percent), and Kentucky (-1.2 percent) also posting losses. The number of Core Based mist for CoreLogic, explained that much of the home price appreciation seen is due to the lower-priced segment of the mar- ket, which is rebounding more quickly than in the upper end. "Home prices below 75 percent of the national median increased Statistical Areas (CBSAs) report- ing price declines is shrinking, with 29 out of 100 seeing losses in May compared with 41 in April. Phoenix saw prices appreci- E xperts surveyed by Zillow expect home prices to decline slightly in 2012 and predict they will bottom in 2013, according to the June 2012 Zillow Home Price Expectations Survey. The survey included 114 respon- dents with backgrounds ranging from economists, real estate experts, and investment and market strategists. The respondents' June predic- tion for home prices is that they will fall 0.4 percent in 2012 and then rise by 1.3 percent in 2013. In 2014, they expect home prices to rise by 2.5 percent, then rise by 3 percent in 2015, and then go up by 3.3 percent in 2016. The survey, which was conduct- ate the most when including and excluding distressed sales with gains of 14.7 percent and 10 percent, respectively. Houston; Washington, D.C.; Dallas; and Philadelphia all saw gains of at least 2 percent when including and excluding distressed sales. ed by Pulsenomics, LLC, is based on the projected path of the S&P/Case- Shiller U.S. National Home Price Index during the coming five years. The average cumulative predic- tion to 2014 was 3.5 percent. Although prices are expected to move on a positive track, two years ago in June 2010, the average prediction among respondents for cumulative apprecia- tion into 2014 was 10.3 percent. The most optimistic quartile of experts predicted, on average, a 1 percent increase in 2012, and the most pessimistic quartile of respon- dents expected to see an average decline of 2 percent. "It's good to start to see some convergence of expectations among economists, as it lends further sup- port to the claim that a bottom is real," said Zillow Chief Economist Stan Humphries. Not all the gathered data was positive for the housing industry. Most respondents, 56 percent, believe the homeownership rate will, in five years, drop below 65.4 percent, the rate recorded in the first quarter of 2012. One in five also thinks the home- ownership rate will be at or below 63 percent; the lowest rate on record was established in 1965 and is 62.9 percent. "However, the fact that more than half of respondents believe that the homeownership rate will fall lower should be a sobering reminder that significant challenges remain ahead for the housing market, from negative equity to millions of fore- closed homeowners who now have impaired credit, making a return to homeownership harder than it would be otherwise," said Humphries. THE M REPORT | 61 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET