Once again, things are looking good for Seattle – and Washington State for that matter. A promising outlook in real estate trends has given home owners and home buyers hope for a lucrative tomorrow.
A housing market rebound seems tenuous following the expiration of the home buyer tax credit, and consumer confidence remains weak due to lackluster employment, but David Stiff, chief economist at Fiserv, says the bottom is near. Home prices in the U.S. have declined 29.5 percent over the past four years, according to the Fiserv Case-Shiller Indexes. Stiff says prices should form a trough early next year, when median prices will be down an estimated 32.9 percent from the 2006 peak.
It has been estimated by early 2014, levels will have climbed about 7.2 percent from 2010 levels, according to the indexes. Fiserv and Moody’s Economy.com base the housing forecast on factors that include income growth, demographic trends, unemployment rates, foreclosure rates, and construction costs. Of 384 places surveyed, theBremerton-Silverdale area in Washington State had the highest four-year growth forecast, with prices expected to increase 44.7 percent from 2010 to 2014. Other leading growth markets: Bend, Ore., where prices are expected to jump 33.6 percent by 2014, and Detroit, with a 33.1 percent forecast. Markets with the weakest projections: Miami and Naples in Florida and Atlantic City, N.J., where prices are expected to continue to fall over the next four years.
Top 10 Housing Markets That Will Be Strongest by 2014
Biggest home price increase projected in 2014: Bremerton-Silverdale metro
1. Washington
Forecast 4-year price increase: 44.7 percent
Current median price: $245,000
Prices to reach trough in: 2010 Q1
Median family income: $69,900
Population: 240,860
The Bremerton-Silverdale area, on Puget Sound’s Kitsap Peninsula, has the highest growth forecast of all MSAs in the country, with prices expected to jump 44.7 percent by 2014, according to Fiserv. Cathy Doney, general manger for Reid Real Estate in Silverdale, says the waterfront community has benefited from government employment, which has helped sustain the job market, and attracted buyers looking to live close to Seattle at a lower cost. Washington’s second-strongest market is Tacoma, with a growth rate expected to be 33.1 percent. Prices in the Seattlearea are expected to grow 25.5 percent by 2014.
Index used to calculate historical home price changes: Case-Shiller
2. Oregon
Biggest home price increase projected in 2014: Bend metro
Forecast 4-year price increase: 33.6 percent
Current median price: $144,533*
Prices to reach trough in: 2011 Q1
Median family income: $58,200
Population: 158,630
The area around Bend area, in central Oregon’s high desert by the Cascade Mountains, has the second-highest four-year growth forecast, 33.6 percent, after Bremerton-Silverdale, Wash. Bend draws home buyers and visitors with its wealth of outdoor recreational opportunities, but its prices have dropped about 40 percent since hitting a peak in late 2006. Fiserv and Moody’s Economy.com now expect a rapid recovery starting next year. Greg Broderick, a real estate broker in Bend, says prices have overcorrected and buyers are seeing good value in the market. Homes priced the low hundred-thousand-dollar range “are being snapped up at a furious pace,” he says. Still, the area must deal with a higher-than-average unemployment rate, which the BLS says was 13.4 percent in June.
Index used to calculate historical home price changes: FHFA
3. Michigan
Biggest home price increase projected in 2014: Detroit-Livonia-Dearborn metro
Forecast 4-year price increase: 33.1 percent
Current median price: $51,000
Prices to reach trough in: 2011 Q2
Median family income: $54,400
Population: 1,925,850
Since reaching a peak in 2006, home prices in the Detroit area have fallen 60.5 percent, according to the Fiserv Case-Shiller Indexes. As homes have become more affordable—the median home price in Detroit is lower than median family income—demand is expected to pick up. Prices are forecast to jump 33.1 percent over the next four years. George Moma, a broker with Century 21 Dupont Realtors, says the growing prevalence of short sales over foreclosures will help drive up the median price in the Detroit metro area. He adds that the area is attracting interest among international investors from the U.K., Dubai, Moscow, India, Ireland, and France.
Index used to calculate historical home price changes: Case-Shiller
4. California
Biggest home price increase projected in 2014: Napa metro
Forecast 4-year price increase: 31.7 percent
Current median price: $355,000
Prices to reach trough in: 2010 Q4
Median family income: $79,600
Population: 134,650
Prices in the Napa area have dropped an enormous 44.6 percent since peaking in early 2006, according to first-quarter 2010 data from Fiserv and Moody’s Economy.com. Despite the drop, home prices are expected to rebound quickly. According to an article in the St. Helena Star, NapaCounty is vulnerable to economic and real estate market fluctuations, but the impact is mitigated by managed growth and the county’s natural and agricultural resources. The unemployment rate in the Napa area fell to 9.3 percent in June, from 11.1 percent in January, according to the BLS.
Index used to calculate historical home price changes: Case-Shiller
5. Nevada
Biggest home price increase projected in 2014: Carson City metro
Forecast 4-year price increase: 31.6 percent
Current median price: $141,524*
Prices to reach trough in: 2011 Q2
Median family income: $63,100
Population: 55,180
By the second quarter of 2011, prices in theCarson City area are expected to have fallen 34.4 percent from peak levels, according to the Fiserv and Moody’s Economy.com. Recovery will depend on job creation, as the unemployment rate was 13.4 percent in June, according to the BLS. While expectations for near-term economic growth have diminished recently and competition for jobs is extremely high, opportunities exist, even in a declining labor market, according to Nevada’s Employment, Training, & Rehabilitation Dept.
Index used to calculate historical home price changes: FHFA
* Source: John Burns Real Estate Consulting, April 2010
| 6. Florida |
Biggest home price increase projected in 2014: Panama City-Lynn Haven-Panama City Beach metro
Forecast 4-year price increase: 26.9 percent
Current median price: $158,669*
Prices to reach trough in: 2010 Q3
Median family income: $53,800
Population: 164,770
Home prices in the Panama City area fell about 27 percent after hitting a peak in 2006, according to the FHFA home price index. Jennifer Mackay, an agent at Keller Williams Success Realty inPanama City, says the market was stabilizing earlier this year, but the BP oil spill led some buyers to pull out and sent the rental market into a tailspin. Despite the area’s large number of foreclosures (1.93 percent in the first half, according to RealtyTrac), Mackay says the new Northwest Florida Beaches International Airport, which opened in May, should help stimulate local business. “I see our economy doing better than others over the course of the next year,” she says. The area’s unemployment rate reached 12.1 percent in January and dropped to 9.3 percent in June, according to BLS data.
Index used to calculate historical home price changes: FHFA
7. Arizona
Biggest home price increase projected in 2014: Flagstaff metro
Forecast 4-year price increase: 26 percent
Current median price: $278,000
Prices to reach trough in: 2011 Q3
Median family income: $56,700
Population: 129,850
Although Arizona has been one of the states hit hardest by the housing downturn, sales activity in the Flagstaff area, home to Northern Arizona University and Flagstaff Medical Center, has picked up since the start of the year, due in part to the home buyer tax credit. Flagstaff-based broker Ann Heitland says prices still may drop in the near term, but the decrease will be limited by shrinking inventory, as there has been a lack of new construction in the area. She adds that because more than one-fifth of the Flagstaff market is second homes, demand from second-home buyers fromPhoenix will also affect the recovery.
Index used to calculate historical home price changes: Case-Shiller
8. New Mexico
Biggest home price increase projected in 2014
Forecast 4-year price increase: 25.8 percent
Current median price: $197,601*
Prices to reach trough in: 2010 Q3
Median family income: $64,300
Population: 147,530
Fiserv and Moody’s Economy.com expect prices in Santa Fe to drop a total of 13.4 percent from their height in 2007. Lois Sury, president of the Santa Fe Association of Realtors, states in a release that median prices fell during the second quarter, but homes are moving across all price ranges. Sales in the city and county of Santa Fe rose 40 percent during the second quarter, compared with the same period last year, according to the association.
Index used to calculate historical home price changes: FHFA
* Source: John Burns Real Estate Consulting, April 2010
9. Wyoming
Biggest home price increase projected in 2014: Cheyenne metro
Forecast 4-year price increase: 23.7 percent
Current median price: $106,602*
Prices to reach trough in: 2010 Q1
Median family income: $62,600
Population: 88,850
The Cheyenne metro area, which includes Laramie County, has been a fairly stable market, with home prices estimated to drop only 2.6 percent from peak to trough. Home prices increased in June, and the average time on the market decreased, according to the Cheyenne Board of Realtors. The metro area had a 7 percent unemployment rate in June, according to the BLS.
Index used to calculate historical home price changes: FHFA
* Source: John Burns Real Estate Consulting, April 2010
10. Alaska
Biggest home price increase projected in 2014: Anchorage metro
Forecast 4-year price increase: 20 percent
Current median price: $177,699*
Prices to reach trough in: 2010 Q1
Median family income: $77,700
Population: 374,550
The housing market in Anchorage has been stable: The estimated peak-to-trough price drop was only 2.1 percent, according to the Fiserv Case-Shiller Indexes. Home sales, aided by the first-time home buyers’ tax credit earlier this year, as well as the fact that the area is home to many people who work in the resilient energy sector, are projected to stay strong as buyers take advantage of lower prices and low mortgage rates. According to Housingpredictor.com, “the state is seeing few foreclosures and is already showing signs of recovering.”
Index used to calculate historical home price changes: FHFA
* Source: John Burns Real Estate Consulting, April 2010
