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Fiserv Predicts Price Declines Through 2011 Followed by Gains

""Fiserv, Inc."":http://www.fiserv.com/ released the its home price index Tuesday noting declines but predicting stabilization by the end of 2012.


Fiserv bases its home price trends on the Fiserv Case-Shiller Indexes of more than 380 markets and data from the ""Federal Housing Finance Agency."":http://www.fhfa.gov/

For the short-term, Fiserv sees continuing declines - at least until the end of the year. However, beginning in 2012, Fiserv predicts small gains in prices.

The Wisconsin-based company notes that the first quarter of 2011 showed a continuation of the double-dip trend started last year.

Prices declined in 302 of the 384 metro areas tracked by the Fiserv Case-Shiller Indexes.

Overall, prices declined 5.1 percent from last year's first quarter prices, according to the indexes.

Fiserv credits the decrease in prices to the decline in demand that settled in after the expiration of the homebuyer tax credit last summer. The company says price declines early this year were also driven by a jump in foreclosure sales, which were temporarily stalled due to processing delays last fall.

""The stabilization of housing markets depends greatly on household confidence in the strength of the economic recovery,"" said David Stiff, chief economist at Fiserv. ""Unfortunately, recent economic news has done little to build confidence.""

He continued: ""Weak job growth numbers in May and June, political wrangling over the Federal government debt ceiling, and the ongoing debt crisis in Europe have all increased pessimism. Households will not become more optimistic about housing markets until they are convinced that the job market is improving and that politicians will not allow debt problems to become new economic catastrophes.""

However, despite these statements and the decline in prices for the first quarter of the year, Fiserv maintains that home prices will stabilize by the end of 2012.

Fiserv expects prices to increase by 2.7 percent in 95 percent metros recorded in its indexes between the first quarter of 2012 and the first quarter of 2013.

""Mortgage delinquency rates have been falling for more than a year. Foreclosure rates have started to decline,"" Stiff said.

""The flood of bank-owned sales, which has swamped many markets, will finally begin to recede this year as fewer houses enter the foreclosure pipeline. Meanwhile, housing affordability has nearly returned to pre-bubble levels,"" Stiff added.

""Relative to family income levels, the average U.S. home is now only 5 percent more expensive than it was in 2000,"" he continued.

According to Fiserv's first-quarter analysis, eight of the 10 worst performing markets showed unemployment rates that exceeded the national average.

Five of the best-performing markets are in Texas. The Midland metro area has experienced a 42 percent increase in prices from the first quarter of 2006 to the first quarter of 2011.

The Odessa metro area experienced a 30.3 percent increase over the same period.

Six of the 10 markets showing the greatest declines in prices from the pricing peak to the first quarter of 2011 are located in California â€" Merced; Modesto Salinas; Stockton; Vallejo-Fairfield; Bakersfield-Delano.

Four of the metro areas predicted to experience the greatest increases in prices between the first quarter of 2011 and the first quarter of 2012 are located in Washington State -- Tacoma; Kennewick-Pasco-Richland; Spokane; Olympia.

Florida is home to four of the 10 metro areas expected to see the greatest rises in home prices between the first quarter of 2012 and the first quarter of 2013 -- Ocala; Palm Coast; Panama City-Lynn Haven-Panama City Beach; Palm Bay-Melbourne-Titusville.

The state is also home to six of the 10 markets expected to see the greatest declines in prices during the same period -- Miami-Miami Beach, Kendall; Fort Lauderdale-Pompano Beach-Deerfield Beach; Naples-Marco Island; Crestview-Fort Walton Beach-Destin; Gainesville; Orlando-Kissimmee-Sanford.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.

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