February 8, 2011 (Shirley Allen)
The average price of a single-family home declined 1.5% in the third quarter from a year earlier but home prices have already stabilized in about a quarter of all housing markets. Expect home prices to decline 5.5% this year, with three-fourths of the housing markets seeing prices stabilize by the end of the year with all markets stabilizing by the end of 2012.
According to a new analysis by information technology firm Fiserv, areas such as San Francisco, San Diego and Washington, DC have already stabilized, while areas like Phoenix, Miami and Los Vegas, and others with large inventories of foreclosed properties and high levels of unemployment are predicted to have significant price declines well into next year.
“Large supplies of foreclosed properties will continue to be the biggest downside risk for home prices and metro area housing markets,” said David Stiff, Fiserv chief economist. He said that in markets that were particularly affected by the housing bubble and subsequent crash, an irregular supply of foreclosed properties will cause prices to bounce around their lows for years to come.
The study found that reduced home prices and low mortgage rates have reduced the price of home ownership to pre-bubble levels, luring many potential buyers into the market. At the same time, the fact that many households can no longer qualify for a mortgage is keeping a lid on demand.
The company said housing prices should stabilize in two of the worse hit states, California and Florida, with most areas expected to show price declines through the third quarter of 2011, followed by gains the following year. Fiserv also said steep decreases are possible “in markets that have been hurt most by the housing crisis.”
In Florida, 10 percent gains in 2012 are foreseen for Ocala, Palm Bay/Titusville and Panama City, following small declines, while prices in the Miami, Ft. Lauderdale and Orlando areas are expected to continue to show significant declines.
In California, most markets are expected to show declines in double or high single digits through the third quarter of 2011, followed by moderate growth over the following 12 months. The nation’s biggest rebound is expected to take place in the Napa Valley region, with a 15.8 percent price appreciation predicted next year, following a 4.7 percent decline in the current one.
Tags: stable home prices, housing markets, unemployment, price declines, foreclosed properties, low mortgage rates, housing prices