The current economic crisis is different from those we’ve had in the past. Previously, the housing market recovered first, helping to pull the broader economy out of the doldrums. This time it’s the other way around. In fact, some economists fear that housing could drag us down into another recession, if things don’t change for the better.
Some analysts have predicted that Tacoma, Washington could become one of the strongest housing markets in the country, over the next two years. Fiserv, a financial data company, expects property prices to rise by up to 25% between now and 2013. They cite undervalued homes, economic diversity and population growth as key factors.
Think home prices are done falling? Think again. If history is any indication, we can expect further depreciation of property values in the United States. A study of past financial crises found that real estate prices fell by an average of 35.5% over a period of six years. We are currently short of both numbers. Don’t shoot the messenger. It’s history.
Phoenix is poised to become one of the hottest real estate markets in the country — again. Prices in the metro area plummeted during the recession, largely the result of over-speculation. But they have fallen so far, so fast, that bargains are now plentiful in the Phoenix area. As the economy continues to recover, investors will begin snatching up the deals and driving inventory down.
Nearly 70% of homeowners expect their property values to rise over the next two years. This is based on a recent survey conducted by the Home Buying Institute. This newfound optimism could be the result of recent gains reported in the S&P/Case-Shiller Home Price Index. Excess inventory is still a problem for much of the country, though.
Like much of California, San Francisco was battered by the housing crisis. Home prices in the metro area plummeted when the bubble burst, and excess inventory piled up. But now, there seems to be a light at the end of the tunnel. The number of properties for sale has declined over the last year or so, and it’s starting to lift prices. Will it become a trend?
For many months, we have heard about what’s wrong with the U.S. housing market. There’s a ‘shadow inventory’ of distressed properties. The foreclosure rate has skyrocketed. Prices have plummeted. Lending standards have tightened. Et cetera. In light of all that, we thought you would like to hear some good news for a change. Here’s an extra helping of it.
Home prices in Detroit, Michigan recently hit 1993 levels. According to the latest release of the S&P/Case-Shiller Home Price Index, prices in the metro area have dropped by 51 percent from their pre-bubble peak. That’s the bad news. The good news is that we fully expect to see a recovery in this housing market sometime in 2012, as inventory falls.
The Case-Shiller report for April 2011 brought a mixture of good news and bad. Home prices increased in all 20 of the metro areas monitored by the index. That hasn’t happened in months. But the numbers don’t look so good when viewed on an annual basis. Year over year, prices are still down in most of the country.
Construction on new homes increased from April to May of 2011. Thirty-year mortgage rates rose slightly but are still incredibly low. Many economists are concerned about the backlog of foreclosure homes that are holding prices down. These are some of the stories included in our latest roundup of the U.S. housing market.