Real Estate & Mortgage Insights
Get Ready for a Triple Dip in Home Prices
We've heard a lot about the threat of a double dip recession, but here's something new - it's possible we might soon see a triple dip in home prices across the country.
Financial Analytics firm Fiserv is predicting home prices to decline by another 3.6 percent by June 2012, which would bring them down to a new post-housing bubble low of a 35 percent loss of value since the early 2006 peak.
The first dip bottomed out in 2009 with a cyclical drop of 31 percent from the peak. The government rolled out the First-Time Homebuyers Credit soon thereafter, which brought prices back up for several months, but as soon as it expired, the price progress was wiped out.
The second dip hit in the winter of 2010 with a fall of 33 percent from the 2006 peak. Prices picked up a little in the next months as the 'robosigning' scandal kept many foreclosured properties from being processed and put on the market. But just as before, once the issue was (mostly) resolved, prices started to fall as more distressed properties became available to buyers.
And without an end in sight for the rush of foreclosures, prices will continue to feel downward pressure. RealtyTrac, a foreclosure data tracking company, reported that the latest quarter saw the first increase in foreclosure filings in three quarters and new default notices rose by 14 percent. Those are sure signs that the foreclosure machines are chugging away again and there will likely be a constant inventory of distressed properties on the market for the next year, at least. And that's not counting the purported 6 million foreclosed homes of "shadow inventory" that have not yet been put back up for sale.
Fiserv's chief economist, David Stiff, also pointed out, as quoted in a CNN article, that high unemployment will also be an influencing factor as homeowners are wary of buying or selling in an unsteady job market.
Some cities will feel the price declines worse than others. By June of next year, FISERV forecasts that Naples, FL will experience an 18.9 percent fall, the biggest drop of any metro area. That's particularly bad news for the town, as it has already seen a 61 percent decrease in prices from the peak.
The data suggests that also in the bottom five will be Las Vegas, NV with a 15.9 percent drop for a total fall of 66 percent, Riverside, CA with a 14.8 percent decline to total of 61 percent, Miami, FL with a 13.2 percent drop to a loss of 57 percent, and Salinas, CA with a 13 percent decline to a total of 66 percent of lost home value.
Among those that will fare, the best are predicted to be Madera, CA and Carson City, NV with home price gains of 15.5 percent each. Yuma, AZ is expected to gain 9.5 percent, while Yuba City, CA and Farmington, NM are predicted to see increases of 9.2 percent and 8.3 percent, respectively.
Fiserv's forecast does not improve dramatically after the middle of next year. Between June 2012 and June 2012, it says prices will climb a reserved 2.4 percent. Bottom line: be prepared for a slow housing market recovery.
