Home Prices Headed Up?
According to First American CoreLogicHome, prices may finally begin to rebound in the second half of this year. The information provider expects prices to decline another 0.9 percent nationwide before bottoming out later this year. If distressed properties are included in the calculation, then prices will decline another 3.7 percent before bottoming out.
Either way, it's good news for homeowners who have watched their homes drop almost 30 percent from April 2006 to January 2010. When distressed properties are taken out of the mix, homeowners still lost about 20.9 percent in their property values during that time.
CoreLogic expects house prices to increase 4.5 percent over the next year. If you exclude distressed sales that increase could be as high as 5.6 percent.
Because real estate is local, the gains will vary by geography. Alabama, Kansas and South Dakota are expected to see the biggest increases in the next few months. Arizona, Maryland, Michigan, Oregon and Nevada, on the other hand, still have declines of of 3.5 percent to 4.5 percent ahead of them.
And there are unknowns that could affect the forecast, such as the "shadow inventory" held by banks that could come onto the market later this year.
In January 2010, many markets were still exhibiting weakness, with 65 of CoreLogic's top 100 Core Based Statistical Areas declining on a year-over-year basis in January. The worst five states for annual price depreciation were Nevada (-16.9%), Idaho (-12.9%), Florida (-9.3%), Oregon (-8.9%) and Arizona (-8.9%).
Mark Fleming, chief economist for First American CoreLogic, said the cumulative loss in home prices of 28 percent is more severe than the next-worst housing recession, when home prices in Louisiana in the mid-1980s declined by a cumulative 24 percent. "It took Louisiana five years to recover from the bottom; we expect this recovery to take at least as long," he said.
Which makes one wonder: are we really on the road to recovery in the housing market? With predictions of two to three million more foreclosures over the next 12 months, First American CoreLogic's call of the bottom may be too optimistic.
Lita Epstein has written more than 25 books including The 250 Questions Everyone Should Ask About Buying Foreclosures."