The US housing market continues to collapse at a breathtaking pace despite a minor improvement in unemployment and record low mortgage rates
Fiserv Case-Shiller reports that average US home prices are now a third below 2006 peaks. This helps account for remarkably high foreclosure rates, which reached, by some measure, three million last year. It is also the cause for the fact that millions of mortgages are underwater. The vicious cycle continues at foreclosure sales drag down price of home in adjacent neighborhoods.
Fiserv Case-Shiller comments in its latest report that
· Average home prices are projected to increase in 172 of the 384 metro areas tracked through the 2012 third quarter, and in 376 metro areas through the 2013 third quarter.
· Home prices fell by double-digits in 18 metro areas, including Carson City, Nev.; Tucson, Ariz.; Atlantic City, N.J.; and Madera, Calif.
· Of the 15 best-performing housing markets in the 2011 third quarter, 11 markets had unemployment rates lower than the national average. Examples include Bismarck, N.D.; Pittsburgh, Penn.; and Dubuque, Iowa.
· Between 2011 third quarter and 2012 third quarter, prices are projected to rise by at least 5 percent in seven metro areas: Gainesville, Ga.; Sumter, S.C.; Lake Havasu City-Kingman, Ariz.; Pueblo, Colo.; Coeur d’Alene, Idaho; Bremerton-Silverdale, Wash.; and Madera, Calif.
· California and Florida, two of the states hit hardest by the housing market bubble, account for 10 of the 20 metro areas forecast to see the greatest increase in home prices through 2016.
It should come as no surprise that home prices in Nevada, Arizona, and central California should fall. These regions have been among the hardest hit in the last three year. They are also in regions with high unemployment and record foreclosures.
Douglas A. McIntyre