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.