Index Predicts 7.1% Home Price Decline

Despite gains in the national average, home prices fell in 70% of metro areas.

December 22, 2010
KEYWORDS case-shiller , home , prices
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Single-family home prices rose 3.6% during the second quarter of 2010 compared to the same period in 2009, driven by strong increases in high-priced markets such as San Diego, Washington, D.C., and San Francisco, according to the Fiserv Case-Shiller Indexes.

But despite gains in the national average, home prices fell in 70% of the 384 metro areas the indexes measure. In fact, many markets experienced double-digit decreases, including Detroit; Boise, Idaho; Reno, Nev.; and smaller markets in Florida and Oregon.

Factors weighing on the housing market include chronic high unemployment, the expiration of the home-buyer tax credit, and the large number of distressed properties that remain in markets such as Florida, Arizona, and Nevada.

Other observations from the second quarter data:
Much of the sustained activity in the first half of the year was due to the first-time home-buyer tax credit that expired in June. Since then, home sales activity has plummeted.
Fiserv and Moody’s Economy.com expect home prices to drop for the next four quarters in nearly all metro markets before they start to stabilize at the end of 2011.
The second double-dip declines will continue through the rest of this year until the end of next summer.

The Fiserv Case-Shiller Indexes forecast that average single-family home prices will fall another 7.1% over the next 12 months. Steep home price declines are expected to continue in markets that have been hurt most by the housing crisis.

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