New data from Fiserv shows that single family home prices rose an average of 3.6 percent in the second quarter of 2010.
The increase was driven by strong performance in relatively high-priced markets, such as San Diego, Washington, D.C., and the San Francisco Bay Area.
But despite the gain in the national average, prices actually fell in 70 percent of the 384 metro areas, compared to the 2009 second quarter. Many markets experienced double-digit drops, including Detroit; Boise, Idaho; Reno, Nev. and many smaller markets in Florida and Oregon.
Factors weighing on the housing market include chronic high unemployment, the expiration of the homebuyer tax credit and the large number of distressed properties that remain in markets such as Florida, Arizona and Nevada.
According to Fiserv, much of the sustained activity in the first half of the year was due to the first-time homebuyer tax credit that expired in June. Since then, home sales activity has plummeted. Fiserv and Moody’s Economy.com expect that home prices will drop over the next four quarters in nearly all metro markets before they start to stabilize at the end of 2011.
“Some of the largest declines in prices will occur in markets that had strong spring and summer 2010 price increases,” said David Stiff, chief economist, Fiserv. “This is because the home buyer tax credit delayed the correction in home prices that is necessary to return housing affordability to its pre-bubble levels.”
Fiserv Case-Shiller expects that the second double-dip declines will continue through the rest of this year until the end of next summer.
“Many of the metro areas that were fortunate enough to have a spring and summer bounce will experience double-dip price declines. If there are no downside surprises for the economy or the housing and mortgage markets, home prices should start to stabilize at the end of 2011,” added Stiff.
For the full report, see here.
