Home Price Predication

No study, of course, can tell exactly how bad the market will get or when it will hit bottom. Even if accurate, a prediction for a metro area won't hold true for all neighborhoods or all types of housing.

The good news is that the current downturn so far looks more like a correction than a crash on a national scale, slowing economic growth but not tipping the economy into a recession. The bad news is that falling prices could be very painful for some people who have bought homes near peak levels over the past year or so in such areas as California, Arizona, Nevada, Florida, Washington, D.C., and the coastal Northeast.

Housing markets in most of these areas began turning down about a year ago after prices more than doubled in many cities during a frantic five-year buying spree. It still isn't clear how hard the landing will be. Last week, the National Association of Realtors reported that the median sales price of a previously occupied home slipped 1.7% in August from a year earlier. That was the first decline from a year earlier in more than a decade.

Other signals are mixed. Yesterday, for example, the Mortgage Bankers Association reported that its seasonally adjusted index of applications for home-purchase loans surged 7.6% in the week ended Sept. 29. But that index is volatile from week to week, and it is still down about 15% from a year ago. In a more positive sign for housing, mortgage interest rates have declined over the past two months. Inventories of unsold homes continue to rise in much of the country, though they have leveled off or fallen slightly in some cities.

Economy.com based its price forecasts on a broad range of factors including demographic trends, job markets, mortgage rates, lending standards, construction costs and limits on land development. Mr. Zandi says the economic model doesn't take into account the supply of previously occupied homes available for sale because there aren't enough reliable data on that nationwide.

Among major metro areas vulnerable to steep price declines, Economy.com points to Nassau and Suffolk counties in suburban New York. For the rest of the New York City area, the firm sees a milder downturn, with the median price bottoming out in late 2008 just 3.5% below its peak in this year's second quarter.

The Las Vegas housing market is being hurt by an exodus of speculators who have dumped homes

Copyright © 2005 CupertinoHousing.com                                      Powered by Engineer Partner the one stop outsource