"In some markets, investor demand for housing will start to fade before first-time and trade-up buyer demand has ramped up enough to take its place. This will be most evident in markets with large foreclosure inventories," said David Stiff, Fiserv's chief economist.
Meanwhile, Fiserv's analysis of home price trends in more than 380 markets found that the average home price rose 1.2 percent for the year ending in the second quarter 2012. By Fiserv's account, that increase marked the first year-over-year increase in home prices nationwide since 2006, excluding 2010, which enjoyed the benefits of the federal home buyer's tax credit.
Prices were up in the majority of the metro areas tracked with prices in Phoenix, AZ (14.5 percent), Detroit, MI (11.6 percent), San Jose, CA (9 percent) and Miami (6.9 percent) leading the way.
"Currently, investors are snapping up foreclosed properties almost as quickly as they are being listed for sale, but the pool of investors is limited and, as prices rise, the potential returns on residential real estate diminish. Consequently, Fiserv Case-Shiller projects a small, short-term price decline for many markets that recently experienced double-digit appreciation," Stiff added.
Housing recovery 'hiccup'
After the "small hiccup" early in 2013, the recovery should resume due to affordability, record low interest rates, better job prospects and overall economic growth.
Conditions should improve consumer confidence and convince them that home prices have stabilized. That will also fire up demand from both first-timers and trade-up buyers, ensuring a sustainable recovery .
Other Fiserv Case-Shiller highlights include:
- Home prices in 37 of the 384 metro areas are projected to increase at more than twice the nationwide annualized rate of 3.3 percent over the next five years; more than half these markets are in three states: California (nine), Florida (five) and Oregon (five). Only 12 markets are forecast to grow at less than half the nationwide annualized rate of 3.3 percent during the same period.
- Of the 29 markets where home prices are still more than 50 percent below their peaks, 15 are in California and 11 in Florida. However, over the next five years, home prices in 24 of these 29 markets should increase at higher rate than the projected annualized rate for the nation as a whole.
- The short-term outlook is not very bright for many residents of the Sunshine State - eight of the 11 markets forecast to experience further price declines in each of the next two years are in Florida.
Published: December 5, 2012
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