"The discouraging thing about that is, yes, we're still in the positive, but that 1 percent has been waning from that three percent, and this comes after what should have been the most active buying season in the housing market for the summer that just ended," he added.
The West, which has some of the largest metropolitan markets in the nation, has seen a huge drop in distressed sales, as fewer properties go to foreclosure. At their peak in 2009, just over half of all sales in the West were of distressed properties; today that share is just over 12 percent, according to Clear Capital. Investors, consequently, are moving on to other markets in the South and Midwest, where there are still bargains to be had. The West is therefore seeing sharper drops in home price appreciation.
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"And that is why the West is really that leading indicator, the canary in the coal mine, because as the West goes, both on the downturn and in the recovery,we've seen the rest of the country go as well," said Villacorta.
A report from John Burns Real Estate Consulting ranks much of California in its "overvalued markets" category for September, but still sees continued price appreciation in 2015, albeit at half the rate of 2014.
Over at CoreLogic, which also tracks home prices, economist Mark Fleming is skeptical. "I suppose you can never say never, but realistically there does not seem to be any particularly strong reason why we should see sustained declines in house prices."
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CoreLogic reported home prices nationally in August up 6.4 percent compared with August of 2013. That includes sales of distressed properties. In the summer of 2013, however, price appreciation was about twice that. Fleming says the drop in appreciation is welcome, a sign of a healthier market.