Fiserv: After Years of Record Declines, Home Prices Begin To Stabilize
02/01/2011
The ups and downs seen in home price data over the past few years indicate a slow recovery in home prices with many false starts, especially in markets riddled with
foreclosed properties, according to Fiserv, Inc. But the company’s analysts say that while the ebb and flow is not over, they expect 75 percent of U.S. metro areas to see stable prices by the end of 2011.
The Wisconsin-based financial services firm on Tuesday released its analysis of home price trends in more than 375 U.S. markets based on the Fiserv Case-Shiller Indexes.
In the third quarter of 2010, U.S. single-family home prices saw an average decrease of just 1.5 percent over the year-ago quarter, as a growing number of metro area housing markets begin to stabilize after five years of record home price declines.
Both Fiserv and Moody’s Analytics report that home prices have already leveled out in one of four metro areas. They estimate that price stability will characterize three-fourths of U.S. markets by the end of this year and 100 percent of markets by the end of 2012.
Based on Fiserv’s report, markets where prices have already stabilized include San Diego; Washington, D.C.; and San Francisco. Markets where prices will stabilize by the end of 2011 include Minneapolis; New York City; and Portland, Oregon. But hard-hit areas such as Miami, Phoenix, and Las Vegas aren’t expected to see stable prices until 2012.
Although price stabilization may be around the corner for most markets, Fiserv is forecasting average single-family home prices to fall another 5.5 percent between now and the end of September, with steep declines expected to continue in markets that have been hurt most by the housing crisis.
These markets, including many in Florida, California, Nevada, and Arizona, will begin seeing prices stabilizing throughout this year and through the end of 2012, Fiserv says. Factors weighing on the housing market continue to include chronic high unemployment and the large number of distressed properties that remain in many of the bubble markets.
“Large supplies of foreclosed properties will continue to be the biggest downside risk for home prices and metro area housing markets,” said David Stiff, Fiserv’s chief economist. “Foreclosure activity declined at the end of 2010, but sales activity of bank-owned homes increased.”
Stiff says the uncertain timing and volume of bank liquidated properties will cause home prices to bounce around their lows for some time.
Data from the Fiserv Case-Shiller Indexes showed that improved housing affordability is luring many buyers into the market, as the huge decline in home prices and low mortgage interest rates have reduced the cost of owning a home to pre-bubble levels. Other factors, however, are dampening demand.
“Since a significant number of households no longer have access to mortgage credit, improving affordability does not necessarily translate into sustained housing demand in every metro market,” Stiff said.
The Fiserv Case-Shiller Indexes are owned and generated by Fiserv. The historical and forecast home price trend information in this report is calculated with the Fiserv proprietary Case-Shiller indexes, supplemented with data from the Federal Housing Finance Agency (FHFA).
The historical home price trends highlighted in this release are for the 12-month period that ended September 30, 2010. One-year forecasts are for the 12 months ending on September 30, 2011.
SOURCE: DSNNEWS.COM
