Oct 25, 2009
People hoped that the worst is over. But recent research reveals that it is just about to get worse. Home prices are about to plunge into new lows next year. According to a forecast on real estate price, home values will drop in 342 out of the 381 markets. Fiserv, a financial analysis firm, forecasts that median home prices will lower by 11.3 percent by June 30, 2010 nationwide. By 2011, the organization sees some stabilization in the market with prices rising by 3.6 percent.
Previously, Fiserv has projected the decline in home-sale prices even while overvalued houses are being taken up by enthusiastic buyers. However, even the firm has underestimated the scope of the crisis. Moody’s Economy.com chief economist Mark Zandi agrees with the Fiserv’s findings. “I think more price declines are coming because the foreclosure crisis is not over.”
It is expected that areas with high levels of foreclosures will have the steepest declines. For instance, Miami is expected to be the biggest loser with prices projected to plunge by 29.9 percent by the June of next year. Home prices there have already fallen by a massive 48 percent in the last three years. If this projection is correct, the median home prices in the area will fall to $142,000 by June 2011.
Another big loser because of the crisis is Orlando, Florida. It is the second to the worst performer and Fiserv projects that prices will decline by 27 percent by June 2010. Then there will be a less severe price drop in 2011. Meanwhile, in Hanford in California, prices are expected to drop by 26.9 percent and this will continue to fall through the following year. Naples, Florida expects a fall of 26.8 percent but it will flatten out during in the following year.
Not all research firms think that prices will drop further though. Filserv’s findings are at odds with the report from S&P/Case-Shiller Home Price Index. It said house prices have already stabilized.
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