Improved affordability is helping markets like California and DC rebound, attracting buyers for starter homes and investment properties. Despite price gains in over 40 percent of metro markets in the closing quarter of 2009, Fiserv projects an overall decline in the period ahead, approaching double digits in Nevada and Arizona. See the following article from HousingWire for more on this.
Home prices trended up in more than 40% of metropolitan areas (155 of 384 markets) in Q409, including markets in California, Ohio, Michigan and Washington DC, according to analysis of price trends by financial data services provider Fiserv.
On average, home prices were down 2.5% in Q409 from the year-ago quarter, which Fiserv noted could be due to continued high unemployment levels, rising interest rates and a high volume of distressed property in markets like Florida, Arizona and Nevada. The data studied for the quarterly report is based on the Fiserv Case-Shiller Indexes.
“Optimism that a sustainable economic recovery is underway is driving increases in home prices across many US metro areas,” said Fiserv chief economist David Stiff in the press release. “More and more, consumers have confidence that buying a home doesn’t mean catching a falling knife. Very large price declines have also made housing much more affordable, drawing in both first-time homebuyers and investors.”
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Fiserv found that California markets, which collapsed roughly a year before many of the affected US areas, show the greatest improvement in housing affordability. Year-over-year, prices are up in eight of 28 California metro areas and have risen from recent lows in 24 of 28 metro areas.
Prices were up 5.2% from a year earlier in Washington DC, and up more than 9% from the early-2009 market bottom.
As of year-end 2009, the median US home price was $170,300, and the median monthly mortgage payment fell slightly to 14% in Q409. And Fiserv warns that downward pressure is likely to remain on prices in the near-term.
“The firsttime homebuyer tax credit has expired, the Federal Reserve has stopped buying residential mortgage backed securities (MBS) and the projected number of foreclosures remains extremely high. As a result, markets with recent price increases may see small price declines before prices finally stabilize at the end of this year or early 2011.”
Fiserv forecasts that average single-family home prices will fall another 3.1% over the next 12 months, which steep declines expected in hard-hit markets. From Q409 through Q410, prices are expected to drop by 9.2% in Nevada, 9.5% in Arizona and 7.7% in Florida.
This article has been republished from HousingWire. You can also view this article at HousingWire, a mortgage and real estate news site.