Statistical Indicators

Gloomy News for Home Prices...

Posted on Wednesday, September 15, 2010

Home prices have hit upon relatively stable ground in recent months – a welcome reprieve from the freefall days most markets had grown acutely accustomed to after the

reverberating bursting of the housing bubble. But that stability may be fleeting. If you heed the words of the seers keeping a close watch over industry trends and movements in price lines, you should be bracing for another decline in property values, as the elusive floor drops a little lower.

The analysts at Moody’s Investors Service say they don’t expect the national house price index to find its bottom until the early half of next year. And even then, they warn that price appreciation will remain weak for at least the next couple of years.

Fiserv expects to see prices bounce up and down around their lows for the next two to three years. A recent forecast from the company paints a picture of particularly steep declines in markets that have been hit the hardest by the housing downturn.
In Nevada, Fiserv projects that by the first quarter of 2011, home prices will be 11.1 percent below Q1 2010 levels. In Arizona the company predicts an annual decline of 10.8 percent by March of next year, and Florida is likely to see prices fall another 8.8 percent.

Barclays Capital says it expects depressed readings in home prices for the next five to ten months, with national property value gauges ultimately bottoming 7 percent from current levels in the first quarter of 2011.

MacroMarkets LLC recently announced the results of its August 2010 Home Price Expectations Survey, compiled from 107 responses of a diverse group of economists, real estate experts, and investment and market strategists.

“For the third consecutive month, the consensus from the experts indicates weakened overall confidence in the U.S. housing recovery,” said Robert Shiller, MacroMarkets co-founder and namesake of the closely-watched Case-Shiller Home Price Index.

Shiller says only 21 percent of the surveyed panelists now predict positive growth in home prices nationwide for 2010. The majority of the respondents expect annual U.S. home price appreciation will not exceed 3.58 percent until 2014.

“Any real improvement in the nation’s economic health will depend on improvement in home prices,” according to Michael Feder, president and CEO of the real estate data and analytics firm Radar Logic.

“Weakening housing demand, coupled with a large and growing supply of unsold homes, make it likely that housing prices will fall by the end of the year, perhaps to new lows,” Feder added. “If home prices make another large move downward, the odds of a second U.S. economic downturn likely will increase.”

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