As economic and housing market conditions continue to stabilize, property values improved significantly in May from a year earlier.
The average price of a home, including distressed properties, appreciated 2 percent from May 2012, according to a report from CoreLogic. On a month-over-month basis, prices were 1.8 percent higher. Meanwhile, this increase is not expected to be a one time occurrence. Analysts from CoreLogic anticipate prices to increase an additional 1.4 percent in the near future.
"The recent upward trend in U.S. home prices is an encouraging signal that we may be seeing a bottoming of the housing down cycle," said CoreLogic president and CEO Anand Nallathambi. "Tighter inventory is contributing to broad, but modest, price gains nationwide and more significant gains in the harder-hit markets, like Phoenix."
Although prices on a national level improved considerably in May, on a state-by-state basis, price changes were a very different story. Specifically, prices in Arizona spiked 12 percent from a year earlier. In the wake of the housing market collapse, Arizona had one of the highest mortgage default and foreclosure rate in the country. However, home buyers and real estate investors in the area continue to recognize the bargain prices of distressed properties in the area and are buying them up at a record pace.
In contrast, the state with the most significant decline was Delaware. Including distressed properties, home prices in Delaware plummeted 9 percent in May from a year earlier. This was more than twice the decline seen Rhode Island, which experienced the second-biggest drop. Home prices in Rhode Island fell 4.4 percent on an annual basis.
A recent increase in the national interest of distressed properties may have been responsible for the stabilizing prices seen in May. During the first quarter, an estimated 26 percent of sales were for foreclosures, according to a report from RealtyTrac.
The average sales price for a foreclosure during this three-month period came at a 27 percent discount compared to non-distressed properties.
"Those pre-foreclosure sales hit a three-year high in the first quarter even as the average pre-foreclosure sales price dropped to a record low for our report," said RealtyTrac CEO Brandon Moore.
It was found that the average price of a foreclosure during the first quarter fell 1 percent from the end of 2012 to an affordable $161,214.