(5/13/2011) Erate Exclusive - The latest report amid the barrage of
studies about the so-called "double dip" in housing prices is putting a
positive spin on the phenomenon, saying lower home prices are a sign of
impending stability and recovery.
The Fiserv Case-Shiller Home Price Index for the fourth quarter of 2010,
says single-family home prices decreased 4.1 percent over the year-ago
period, continuing the double-dip in prices that started in the summer of
2010 after the homebuyer tax credit expired.
Relative to household income, the slide has shifted affordability to a level that's at or near
pre-bubble levels in nearly every metro area across the nation, the report
says. That's inline with other recent studies.
However, while others say home price stability won't begin to
appear until 2012, Fiserv believes the average U.S. home prices will start
to stabilize as early as the third quarter this year.
By the end of 2012, home prices in even the hardest-hit housing markets
will level out, the report says.
"The first step toward restoring confidence in housing markets is an
improvement in consumer sentiment, which we expect will increase slowly
through 2011 due to stronger job gains and a falling unemployment rate,"
said David Stiff, chief economist, Fiserv.
"As confidence rises, the decline in home sales that started in 2006
will, finally, come to an end," Stiff said.
Hanley Wood's online Builder magazine, begs to differ and says the
"double-dip" moniker is a misnomer because new weakening economic indicators
in the housing market aren't causing a new round of price dips.
The down slide in home prices was artificially and temporarily
interrupted by the now defunct home buyer tax credit and delayed
foreclosures caused by the "robo-signing" fiasco.
Without those factors, home prices would have continued to fall in "a
single trajectory down to where the market is trending now, only at a much
slower pace...The house-price correction that started toward the end of 2008
continues. It will stabilize -- after an overshoot -- when REO sales drop to a lower
percentage of total home sales transactions...in 2012," reports Builder.
Fiserv's data does forecast the pace of recovery will be uneven across
the nation.
The study also said:
• On a year-over-year-basis, home prices fell in three-quarters of
U.S. metro areas.
• While Fiserv and Moody's project the national U.S. home price
average will stabilize in the third quarter of 2011, an additional 3 percent
decline is expected in the first half of this year.
• The most stressed housing markets have high unemployment and
housing vacancy rates and include Detroit, Las Vegas and Orlando.
"Economic growth in these markets was highly dependent on residential
real estate from 2002 to 2006, with many new jobs tied directly or
indirectly to booming housing markets. When the bubble popped, these markets
suffered the largest job losses. Rapidly falling employment undercut housing
demand, causing home price depreciation to accelerate, leading to more job
losses in residential real estate," Stiff said.
• Markets better positioned for more robust recoveries include
Dallas, Milwaukee, Houston, New York, Baltimore and Pittsburgh.
From other "double dip" studies
• According to the Zillow Home Value Index, U.S. home values fell 3 percent
from the last quarter 2010 to the first quarter this year, posting the
largest quarter-over-quarter decline since the fourth quarter of 2008, when
many thought the housing market had bottomed,
Zillow revised an earlier forecast to forecast a new home price
bottom isn't likely until 2012.
• Clear Capital
recently reported home prices dropped 4.9 percent quarter-to-quarter, slid
5 percent year-over-year and now stand at 42 percent below the market peak
in mid-2006.
Clear Capitalsays, over the last
nine-month period ending in April 2011, home prices have fallen 11.5 percent
nationwide. That's a rate of decline not experienced since 2008, during the
first long dip in home prices.
Follow the link to continue reading the related articles
