Report: More price drops predicted for 2011

Home prices declined in 70 percent of major U.S. markets during 2010 according to a Clear Capital report, which predicts that 2011 will see additional drops in home values.

According to the company's monthly HDI Market Report, there was a year-over-year price change of -4.1 percent in 2010, and forecasts another 3.7 percent year-over-year drop in 2011.

"Understanding which path a given market is likely to follow is dependent on several key factors, but the two clear drivers are local unemployment rates and the prevalence of distressed homes," said senior statistician Alex Villacorta.

Last year saw a series of turbulent changes in the market, where prices increased by over 9 percent from late March to mid August, before dropping by 9.4 percent from September to December. The national unemployment rate hovered at 9.5 percent for most of the year, meaning that a chunk of Americans were unable to afford a relocation.

The report predicted various levels of decline across the four regions of the U.S., although it said local markets in the West are likely to experience some recovery.

Intimidated by the dismal state of the housing markets, many Americans turned to renting in 2010, which Moody's Analytics says caused a 3 percent increase in rental prices, reported CNN Money.
 

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