Home prices in 45 of the largest metro markets tracked by First American CoreLogic’s LoanPerformance Home Price Index are expected to hit bottom in March, and show a modest annual gain by October 2010, the company said in a report today.
The LoanPerformance Home Price Index showed national home prices declining by 7.8 percent in October from a year before, off 30.1 percent from their April 2006 peak, the company said.
Prices in the 45 largest metropolitan markets are expected to fall another 4.2 percent before bottoming out in March, First American CoreLogic said. The improving outlook for inventories and unemployment should allow the index to show year-over-year appreciation in those markets of just under 1 percent by October.
Nationwide, some 23 percent of borrowers were underwater as of September, which along with a growing "shadow inventory" of homes constitutes "a significant risk for future home-price stability" in 2010, First American CoreLogic said.
The shadow inventory — homes repossed by banks but not yet on the market — grew to 1.7 million homes in September, up from 1.1 million homes a year earlier, the report said. The combined inventory of visible and shadow inventory was 5.5 million homes in September 2009, down from 5.7 million a year ago.
"Rust belt" cities in Michigan and Ohio are expected to see the greatest declines in the next six months, including Detroit (-12.7 percent), Warren-Troy-Farmington Hills, Mich., (-11.4 percent) and Cleveland (-6.3 percent).
FirstAmerican CoreLogic projects that large urban centers in California will see the strongest recovery in 2010, including San Francisco (5.7 percent), Los Angeles (5 percent), San Diego (4.7 percent) and Sacramento (4.6 percent).
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