Index Predicts 7.1% Home Price Decline
Despite gains in the national average, home prices fell in 70% of metro areas.
Single-family home prices rose 3.6% during the second quarter of 2010 compared to the same period in 2009, driven by strong increases in high-priced markets such as San Diego, Washington, D.C., and San Francisco, according to the Fiserv Case-Shiller Indexes.
But despite gains in the national average, home prices fell in 70% of the 384 metro areas the indexes measure. In fact, many markets experienced double-digit decreases, including Detroit; Boise, Idaho; Reno, Nev.; and smaller markets in Florida and Oregon.
Factors weighing on the housing market include chronic high unemployment, the expiration of the home-buyer tax credit, and the large number of distressed properties that remain in markets such as Florida, Arizona, and Nevada.
Other observations from the second quarter data:
• Much of the sustained activity in the first half of the year was due to the first-time home-buyer tax credit that expired in June. Since then, home sales activity has plummeted.
• Fiserv and Moody’s Economy.com expect home prices to drop for the next four quarters in nearly all metro markets before they start to stabilize at the end of 2011.
• The second double-dip declines will continue through the rest of this year until the end of next summer.
The Fiserv Case-Shiller Indexes forecast that average single-family home prices will fall another 7.1% over the next 12 months. Steep home price declines are expected to continue in markets that have been hurt most by the housing crisis.