Homes: About to get much cheaper
National home prices are forecast to shrink another 11%. Miami, Las Vegas and Phoenix will record steep declines, but a few cities will actually post gains.
By Les Christie, CNNMoney.com staff writer
Last Updated: October 20, 2009: 11:07 AM ET
NEW YORK (CNNMoney.com) -- If you thought home prices were bottoming out, you may be wrong. They're expected to head a lot lower. Home values are predicted to drop in 342 out of 381 markets during the next year, according to a new forecast of real estate prices. Overall, the national median home price is predicted to drop 11.3% by June 30, 2010, according to Fiserv, a financial information and analysis firm. For the following year, the firm anticipates some stabilization with prices rising 3.6%.
In the past, Fiserv anticipated the rapid decline in home-sale prices over the past few years -- though it underestimated the scope.
Mark Zandi, chief economist with Moody's Economy.com, agreed with Fiserv's current assessments. "I think more price declines are coming because the foreclosure crisis is not over," he said. In fact, those areas with high concentrations of foreclosure sales will experience the steepest drops, according to Fiserv. Miami, for example, is expected to be the biggest loser. Prices are forecast to plunge 29.9% by next June -- after having already fallen a whopping 48% during the past three years.
If Fiserv's forecast holds, Miami real median home price will tumble to $142,000 by June 2011.
In Orlando, Fla., the second-worst performing market, Fiserv anticipates a 27% price collapse by June 2010, followed by a less severe drop the following year. In Hanford, Calif., prices are estimated to drop 26.9% and continue falling 9.5% in 2011; in Naples, Fla., they're expected to fall 26.8% and then flatten out.
Other notable losers include Las Vegas, where prices have already fallen 54.6% and are expected to lose another Homes: About to get much cheaper 23.9% by June 2010. In Phoenix values have already collapsed by 54% and could fall another 23.4%. In both
cities, Fiserv anticipates the losses to continue into 2011, but they will be less than 5%. Prices had stabilized. The latest forecast is at odds with the past few months of the S&P/Case-Shiller Home Price index. That report has given hope that most housing markets may have already stabilized because the composite index of 20 cities rose in May, June and July.
Nationally, it found that home prices have gained 3.6%. Brad Hunter, chief economist for Metrostudy, which provides housing market information to the industry, however, expects a change in fortunes, however. "I'm afraid Case-Shiller may be just a temporary reprieve," he said. He pointed out that the tax credit for first-time home buyers helped support prices during the three months of Case-Shiller gains. By the end of November, the credit will have been used by 1.8 million homebuyers, at least
355,000 of whom would not have bought a house without the tax break, according to estimates by the National Association of Realtors. But the market assistance ends when the credit expires on Dec. 1. Hunter also sees a new wave of foreclosure problems coming from higher priced loans and prime mortgages. He expects a high failure rate for option ARM loans that were issued to prime customers so they could buy homes in bubble markets, such as California and Florida. In those areas, prices for even modest homes had skyrocketed.
WinnersA handful of metro areas will buck the trend, according to Fiserv. Six markets will remain flat, and 33 will actually post gains. The biggest winner will be the Kennewick, Wash., metro area, where home prices have ramped up
8.9% over the past three years and are expected to increase another 3.4% by June 2010.
Fairbanks, Alaska, prices are anticipated to rise 2.5%, while Anchorage will climb 2.1%. Elmira, N.Y., prices may
inch up 1.8%. The nation's biggest metro area, New York City, will underperform the nation as a whole over the next two years, according to Fiserv. Prices, which have already fallen 21.7% to a median of $375,000, are expected to fall 17.4% by June 2011. Home values in the nation's second largest city, Los Angeles, have fallen 43.3% since June 2006 to a median of $313,000. They are expected to dive another 20.2% over by June 2010, and then start to climb in 2011. Chicago prices, which have fallen 25.2% to $227,000, will drop only 4.1% over the next 12 months and then starting to climb.
The Detroit metro area now has the dubious distinction of having the lowest home prices in the country. Prices have dropped 51.7% to a median of $50,000. They're expected to fall another 9.1% and then stabilize.
First Published: Find mortgage raOtecstoibneyro2u0r,a2r0e0a9: 3:45 AM ET
Find this article at: http://money.cnn.com/2009/10/20/real_estate/home_price_forecast/index.htm
Friday, October 23, 2009
Monday, October 19, 2009
Will the $8,000 Tax Credit Be Extended
Groups urge U.S. to extend home purchase tax credit
NEW YORK (Reuters) - Real estate and banking industry trade groups urged the Obama administration on Monday to press to extend and expand a tax credit for first-time home buyers that they said is instrumental to stabilizing the fragile housing market.
A government program that offers an $8,000 tax credit to first-time home buyers, which is due to expire on November 30, should be extended for another year and expanded to include all buyers of homes that would be primary residences, the trade groups said in a letter.
The letter from the Mortgage Bankers Association, National Association of Home Builders, and the National Association of Realtors was addressed to Treasury Secretary Timothy Geithner, Department of Housing and Urban Development Secretary Shaun Donovan, and Lawrence Summers, chair of the National Economic Council.
"Achieving equilibrium between supply and demand for housing is critical to stabilizing housing prices, and therefore household wealth," said the group.
Extending the tax credit would help boost demand enough to absorb housing inventory, the groups said in the letter.
The National Association of Realtors estimated the tax credit is responsible for generating about 335,000 in additional home sales.
Pressure from the groups comes as the housing market is showing nascent signs of stability, including price increases for the first time in three years. But expectations banks will have to dump a glut of foreclosed homes on the market despite mortgage modifications have led many analysts to predict a retrenchment, especially as the typically soft winter selling season sets in.
The November 30 deadline for the tax credit will likely mark a "false peak" in the house price rebound, unless the program is extended, according to John Burns Real Estate Consulting.
Lawmakers have said they are considering extending or expanding the tax credit.
Senate Majority Leader Harry Reid backs a bipartisan bill to extend the credit for six months. A Senate Republican plan would expand it to $15,000.
"Our fragile economy is just beginning to show signs of recovery," the housing groups said. "We should not jeopardize that recovery by letting this tax credit expire."
(Reporting by Al Yoon; Editing by Leslie Adler)
Subscribe to:
Posts (Atom)
