Some market observers are predicting that the slowly strengthening housing market, marked by fewer mortgage delinquencies and foreclosures, may get a boost from consumers who see value in home ownership as compared to other investments. The U.S. credit downgrade has market investors worried and it is expected that homes in metropolitan areas will gain the benefit of rising value. The biggest price increases are expected to be seen in Seattle, Tacoma, Wash., Tucson, Palm Bay, Fl. and Memphis. For more on this continue reading the following article from The Street.
Picture an old-fashioned scale with two sides, like the scales of justice. On one side of the scale, stack up the facts of fewer mortgage delinquencies, fewer foreclosures and greater housing affordability. On the other side, pile on the southward-sailing stock market, flat employment numbers, Europe’s fiscal woes and the ratings downgrades by Standard & Poor’s.
It’s hard to imagine that the first side would have the heft to balance out — or even outweigh — the second side for the U.S. housing market. But that’s just what seems to be happening, at least in some markets, where affordability is still pushing home prices upward.
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By the end of the year, financial-services-technology firm Fiserv(FISV) expects housing prices to stabilize in two-thirds of metropolitan areas, according to the latest analysis of home prices in 380 U.S. markets — based on the Fiserv Case-Shiller Indexes — released Tuesday. That number will increase to 95% of all metro areas by the first quarter of 2013. "Relative to family income levels, the average U.S. home is now only 5% more expensive than it was in 2000," David Stiff, Fiserv’s chief economist, tells DailyFinance.
He added that Monday’s S&P downgrade of Fannie Mae and Freddie Mac could hurt consumer confidence, but "the resurgent demand for Treasuries could cancel out" the downgrade.
During the next two years, Fiserv projects that these markets will see the biggest price increases: Tacoma, Wash. (24.9%), Palm Bay, Fla. (18.3%), Seattle (10.2%), Tucson (10.2%) and Memphis (10.%).
The company also expects prices to grow in areas such as Washington, D.C., San Diego and the San Francisco Bay Area in California, where strong labor markets and desirable geography will prompt home buyers to get in at low prices. Ex-burbs continue to recover more slowly than metropolitan areas because gas prices and long commutes are dissuading buyers.
This article was republished with permission from Daily Finance.