It is no secret that the housing market has been a very rough rollercoaster ride as the market has suffered its highs and lows over the last fifteen years. However, 2012 brought with it some positive industry changes that bring hope for a more stable market in the near future. For the first time since 1997, housing prices are as close to “normal” as they were before the market crash, according to David Stiff, Chief Economist for Fiserv, a company that records trends and reports data on the housing market.
Housing prices were increasing by 5% each year for a series of years between 1998 and 2006, but endured the worst of the “bubble burst” after 2006 by dropping over 30%. The effects of this crash lasted through to September 2012. Now in late 2012/early 2013, the housing market is finally beginning to see prices stabilizing. This positive recovery in the housing industry is expected to continue to rise at a rate of 0.6% through the third quarter of this year, and then steadily increase to 3.7 % during the last quarter of 2013, moving into 2014. According to an article in RIS Media, and current data from Fiserv, the steadily rising increase will settle itself at around 3.3% in 2014 and remain at that rate for the next three years.
With all the positive news and encouraging data surrounding the industry, David Stiff from Fiserv still cautions that there are millions of homes currently in foreclosure due to delinquent mortgages, which was not the case back in 1997. Stiff also states that though so many homes are on the market waiting to be sold because of these delinquencies, the good news is that prices and mortgages are historically low, relative to the income of potential buyers; and this turn-around in the housing market could have a positive effect on the overall economy.
Fiserv's tracking of home prices in major metropolitan areas shows increases in cities such as Detroit, Phoenix, and San Jose, California, which were some of the cities that were hit the hardest by the “bubble burst”. These cities are now showing some of the biggest price increases in the country between September 2011 and September 2012.
Foreclosures are declining in most states, which is showing that the foreclosure issues in most areas is being resolved. With some modest job growth, increasing buyer confidence and many affordable properties on the market, the ingredients are all in place for a continued successful recovery.
Source: CNN Money