Home Prices Projected to Rise 3.9% (Annualized) Over 5 Years

Home Prices Seen Rising at 3.9% (Annualized) Over 5 YearsAfter a dizzying year of home price gains in 2012, the housing market is poised to cool down somewhat nationally as prices are projected to rise 2.5 percent this year — but at a 3.9 percent annualized rate over the next five years.
That’s the projection from the CoreLogic Case-Shiller Indexes Report released Thursday that puts the home price surge for all of 2012 at 7.3 percent, the strongest rate of appreciation in nearly seven years.
Some of the metro areas hardest hit after the housing bubble meltdown, such as Phoenix (+24 percent), Miami (+14 percent) and Las Vegas (+13 percent), recorded the largest year-over-year increases.
Seven out of 10 metro areas recorded a home price gain in 2012. In contrast, fewer than one-in-five markets had an increase in 2011.
Despite major gains, some of the foreclosure/devaluation epicenters are still significantly behind their pre-crisis peak.
For example, Phoenix has seen home prices surge 27 percent since the market hit bottom in 2011, making it the strongest residential real estate market in the U.S. However, home prices there are still 45 percent below their 2006 peak.
“Even if double-digit price appreciation were to continue in former bubble metro areas, there is no reason to believe that new home price bubbles are forming. That’s because single-family homes in these markets are still very affordable, even after last year’s large price gains,” said Dr. David Stiff, chief economist for CoreLogic Case-Shiller.
Home Prices Seen Rising at 3.9% (Annualized) Over 5 Years

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