Housing Market Forecast: Recovery's Hot, Cold Spots
Moody's Analytics came to the conclusion using data regarding house prices, income growth, and trends in employment and population. Its data also sheds light on what are expected to be the hottest and coolest housing markets.
Las Vegas is expected to exceed that recovery by almost 2 percent a year with a predicted growth rate of 5.04 percent. But Miami, another hard-hit market, will continue to see a price drop through 2012, when it's expected to hit bottom. After hitting bottom, it will only recover at the rate of 1.13 percent per year through 2020, Celia Chen, Senior Director of Moody's Economy.com, told HousingWatch. So if you're thinking about real estate speculation, stay away from Miami.
The five markets that Moody's predicts will see the fastest appreciation between now and 2020 include: Las Vegas (up 5.04 percent per year); Tacoma, Wash. (up 4.96 percent per year); Albuquerque (up 4.86 percent per year); Eugene, Ore. (up 4.59 percent year); and Toledo (up 4.45 percent per year).
For those in the bottom five, the news is not so good. Virgina Beach, which is expected to see the lowest appreciation nationwide, will only average 1.07 percent in house-price increases each year between now and 2020. Luckily for those in Virginia Beach, the market held onto its value during the downturn, so homeowners don't need a major price boost to get out of underwater mortgages.
Those in Miami, meanwhile, saw housing prices soar as the housing bubble inflated, but after it burst prices dropped 48 percent from their high.
If you buy a house today in Miami, you could still see a loss through 2012 and may not regain it for a few years unless you get a great deal. So be careful house shopping in the Miami area.
Provo, Utah, also hasn't seen its bottom yet, according to Moody's. Prices are expected to drop 23 percent by the time Provo hits bottom in 2011. Then house prices are expected to start a slow climb to recovery at the rate of just 1.17 percent per year through 2020.
Nashville, which did not see as dramatic an increase as the housing bubble inflated, is not expected to see a significant decline. Moody's expects Nashville house prices to increase just 1.23 percent per year through 2020.
Austin also did not see a major surge during the real estate boom, so it won't see much of a recovery, either, as the rest of the country's house prices began to rebound. Moody's expects Austin house prices to climb just 1.26 percent through 2020.
This report shows real estate is returning to its traditional pricing structure of location, location, location. Dependence on national trends will no longer be a major part of the decision-making about what to pay for a house.
Lita Epstein has written more than 25 books including "Reading Financial Reports for Dummies."
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