(11/19/2010) Erate Exclusive - The home buyer tax credit delayed the
housing market's slide to the bottom, and that will put off the recovery
until late 2011.
Fiserv and Moody's Economy.com expect that home prices will drop over the
next four quarters in nearly all metro markets, before prices have a shot at
stabilizing by the end of 2011.
"Some of the largest declines in prices will occur in markets that had
strong spring and summer 2010 price increases," said David Stiff, chief
economist at Fiserv.
"This is because the home buyer tax credit delayed the correction in home
prices that is necessary to return housing affordability to its pre-bubble
levels," Stiff added.
Both reports, offering the same timing for housing market recovery, also
both blame chronic high unemployment and the large number of
foreclosed and other distressed properties on the market.
NAR added tight credit as a reason the housing market is still on the
ropes.
"Tight credit and appraisals coming in below a negotiated price continue
to constrain the market. Nonetheless, there appears to be a pent-up demand
that eventually will be unleashed as banks resolve their issues with foreclosures and the labor market improves"
late next year, said Lawrence Yun, NAR chief economist.
Other observations from the Fiserv's second quarter, 2010 analysis of
home price trends in more than 375 U.S. markets include:
• In the second quarter of 2010, U.S. single-family home prices rose
an average of 3.6 percent over the same year-ago quarter, driven by strong
price increases in relatively high-priced markets, such as San Diego,
Washington, D.C., and the San Francisco Bay Area.
• Despite the overall gain, prices toppled in 70 percent of the 384
metro areas, compared to the 2009 second quarter. Many markets experienced
double-digit drops, including Detroit, MI; Boise, ID; Reno, NV and many
smaller markets in Florida and Oregon.
For example, prices in Phoenix increased by 5.5 percent from the 2009
second quarter to the 2010 second quarter, but are expected to fall by 16
percent over the next four quarters ending in second quarter 2011.
• With few exceptions in individual cities, the first, and most
significant local declines, occurred between the peak of the housing bubble
and the summer of 2009, with tax credit induced price increases happening
between the summers of 2009 and 2010.
Fiserv expects that the second double-dip declines will continue through
the rest of this year until the end of next summer.
"Many of the metro areas that were fortunate enough to have a spring and
summer bounce will experience double-dip price declines. If there are no
downside surprises for the economy or the housing and mortgage markets, home
prices should start to stabilize at the end of 2011," Stiff added.
The Fiserv Case-Shiller Indexes also forecast that average single-family
home prices still have a more than 7 percent decline ahead during the next
12 months, with prices in hardest hit markets expected to plummet even
further.
That's identical to the level of decline NAR says is ahead for existing
home prices, nationwide, year-over-year in the first and second quarter's
next year.
Fiserv says from the second quarter of 2010 through the second quarter of
2011, average home prices in Nevada, Arizona and Florida are projected to
decline 12.4 percent, 11.5 percent and 9.4 percent, respectively. In
addition, home prices are projected to decline 12.7 percent in the District
of Columbia.
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