Home Prices Expected to Drop Another 11 Percent before Rising in Mid-2010

Home Prices Expected to Drop Another 11 Percent before Rising in Mid-2010

The national median home price is expected to drop an additional 11.3 percent before bottoming in June 2010, according to financial information and analysis firm Fiserv. After bottoming out, Fiserv predicts some stabilization and then a slight increase in value of 3.6 percent. Mark Zandi, chief economist with Moody’s Economy.com, agrees with Fiserv. “I think more price declines are coming because the foreclosure crisis is not over,” Zandi told CNN/Money.com.

Over the next year, Fiserv noted that prices will drop in 342 of the 381 markets. Miami is expected to take the heaviest hit, with prices falling 29.9 percent by next June in addition to the 48 percent drop in value the market had during the past three years. By June 2011, the median home price in Miami is expected to be $142,000.

Other areas expected to have significant drops in value include Orlando, Fla., with a fall of 27 percent; Hanford, Calif., with a drop of 26.9 percent; Naples, Fla., with a decrease of 26.8 percent; Las Vegas, with a drop of 23.9 percent; and Phoenix, with a fall of 23.4 percent.

Fiserv’s outlook differs from the S&P/Case-Shiller Home Price Index, which suggests that the housing market already may be stabilizing after increasing 3.6 percent since May 2009. Brad Hunter, chief economist at Metrostudy, told CNN/Money that he agrees with Fiserv. “I’m afraid Case-Shiller may be just a temporary reprieve,” Hunter said, pointing out that a wave of foreclosures will soon hit that will cause home values to decrease, and that the first-time home buyer tax credit has been skewing current housing data.

Fiserv noted that 33 markets will actually post gains over the next year while six will remain flat. With an expected increase of 3.4 percent, the Kennewick, Wash., metro area is expected to fair the best. Following closely behind are Fairbanks and Anchorage, Alaska, which are expected to increase 2.5 percent and 2.1 percent, respectively, and Elmira, N.Y., which is expected to increase 1.8 percent.

Prices in New York City are expected to fall an additional 17.4 percent by June 2011, while Chicago and Los Angeles are forecasted to fall an additional 25.2 percent and 20.2 percent, respectively, by June 2010. The Detroit metro area, which has the lowest home prices in the country, is expected to fall an additional 9.1 percent.

Chase changing appraisal requirements

Chase, the third largest mortgage lender, with a 6% market share has changed their appraisal policies.

Here's a quote:"And while we're talking about appraisals, Chase Correspondent clients were told that Chase is making changes to their Collateral Policy which became effective October 2. They are eliminating Chase Approved Appraiser status, establishing minimum appraiser requirements, validating review and ineligible appraiser status, and eliminating First American Appraisal Services (eAppraiseIT) as a Chase-approved Appraisal Management Company (AMC). In fact, the Chase Appraiser Web site has been updated to remove all Chase Approved Appraisers. Correspondents can immediately take advantage of the revised minimum appraiser requirements and validation of Chase Ineligible status. Chase Home Lending will no longer approve, suggest or dictate the use of any specific appraisers. All appraisers with one of the valid state appraisal license/certifications (state license, state certified residential, state certified general) are permitted to complete appraisal services for loan transactions sold to Chase based on loan amount & complexity parameters. (A field review by a State Certified Appraiser is still required when the original appraisal is prepared by an appraiser in a Chase Review status.)"

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