BROOKFIELD, Wis. – Aug. 6, 2012 – After six years of decline, the U.S. housing market is finding its footing as home prices stabilize and begin to recover across the country, according to the latest analysis of more than 380 U.S. markets tracked by the Fiserv Case-Shiller Indexes.
Single-family home prices increased in 151 out of 384 metropolitan areas in the first quarter of 2012 compared to a year ago. Overall, U.S. homes prices declined by 1.9 percent on a year-over-year basis, and are forecast to decline another 1 percent in the next twelve months.
However, Fiserv Case-Shiller projects a 5 percent increase in U.S. home prices between the first quarters of 2013 and 2014.
In addition, price changes vary greatly by market. The long-term prospects for Florida housing present a mixed picture: The state is home to four of the 10 worst and four of the 10 best markets based on projections for annualized change in home prices over the next five years.
“Inventories of single-family homes have dropped below 2.5 million units, the lowest levels since 2004. This shrinking supply of unsold homes is nudging home prices upward in selected markets,” says David Stiff, Fiserv’s chief economist. “However, negative equity remains a factor constraining supply in some markets.”
Price gains were recorded in many markets hard-hit by the housing crash, including Detroit (+8.6 percent) and Miami (+6.4 percent). However, prices continued to fall in many metro areas, especially those still flooded with large numbers of foreclosed properties, such as Atlanta (-17.4 percent), Las Vegas (-7.4 percent) and Memphis (-4.7 percent).
The changing composition of unsold homes is boosting prices in some metro areas, according to the analysis. In many crash markets, foreclosed properties account for a smaller proportion of sales, with short sales increasing. Because short sales are usually less discounted than foreclosures and more non-distressed homes are entering the market, prices are jumping in many places even when sales activity is flat.
“The state of the overall economy presents the biggest risk to the housing market,” says Stiff. A drop in consumer confidence following a monetary crisis in Europe or political impasse in Washington D.C., Stiff says, could hurt any housing rebound. However, housing is fairly cheap right now, and any financial crisis could lead to even lower mortgage rates. “We may be at a point where housing markets can finally withstand a weak economy,” Stiff adds.
The housing market in most of the U.S. will start seeing an uptick in the spring of 2013, with Fiserv Case-Shiller projecting that home prices will increase in 358 of the 384 metro areas (more than 92 percent of markets) between the first quarters of 2013 and 2014.
© 2012 Florida Realtors®
Reprinted with permission. Florida Realtors®. All rights reserved.