Home prices rise in Q2, but big drops expected

While a financial data firm reported a 3.8 percent rise in the nation's home prices during this year's second quarter, officials tied the increase to increased moving activity from the federal homebuyer tax credit, which pushed up home sales to the spring and will likely lead to falling home values until economic factors improve.

In fact, 70 percent of 384 major metropolitan areas in the country saw home prices that were lower in the second quarter compared to a year earlier, and prices will likely fall another 7.1 percent over the next year, reported Fiserv. Using data from the company's Case-Shiller Home Price Index, researchers estimated that even areas that have enjoyed positive relocation activity recently will see prices fall over the next 12 months. Washington, D.C., for instance, was predicted to experience a 12.7 percent decline, higher than the estimated 12.4 percent drop for Nevada.

"Many of the metro areas that were fortunate enough to have a spring and summer bounce will experience double-dip price declines," said Fiserv's chief economist, David Stiff. "If there are no downside surprises for the economy or the housing and mortgage markets, home prices should start to stabilize at the end of 2011."

High unemployment continues to be one of many factors weighing on the overall economy, and many Americans have found themselves unable to set their moving plans in motion without a stable job. Roughly 14.8 million people were unemployed in October, according to the Department of Labor.
 

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