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Fiserv Projects Home Price Growth into 2017

The latest numbers from the "Fiserv Case-Shiller Indexes":http://www.caseshiller.fiserv.com/indexes.aspx show that the housing market may finally be on solid footing again.

Average U.S. home prices increased by 1.2 percent in Q2 2012 from the same quarter last year. The year-over-year increase is the first since 2006 when excluding 2010, which was influenced by the federal homebuyer's tax credit.

The indices indicate that from the second quarter of 2012 to the same quarter in 2013, home prices will increase 0.3 percent and will continue to increase as the year progresses. Fiserv projects that housing prices will grow annually at a rate of 3.3 percent from mid-2012 through Q2 2017.

The cities hardest hit by the housing bubble burst have seen the biggest increase. Phoenix saw an uptick of 14.5 percent, Detroit saw an increase of 11.6 percent, and Miami saw home prices rise by 6.9 percent.

"The real estate market in the spring and summer of 2012 was the strongest since the peak of the bubble. There is now strong evidence for a slow, sustainable recovery on both the supply side and the demand side," said David Stiff, chief economist, Fiserv in a statement. "On the demand side, existing home sales increased to their highest levels since 2007, save for the sale spikes caused by the home buyer tax credit. At the same time, supply is decreasing...In many markets, limited inventories are holding back sales activity as potential buyers are unable to find properties to purchase, pushing up home prices as buyers compete for a dwindling supply of homes for sale," he continued.

The housing sector isn't in the clear just yet. Analysts expect for sales activity and price appreciation to stall because of the impending fiscal cliff. Fiserv Case-Shiller expects that the battle over the fiscal cliff will restrain the housing market and anticipates that next summer's market will likely be weaker than this year's.

"In some markets, investor demand for housing will start to fade before first-time and trade-up buyer demand has ramped up enough to take its place. This will be most evident in markets with large foreclosure inventories," Stiff added. "Currently, investors are snapping up foreclosed properties almost as quickly as they are being listed for sale, but the pool of investors is limited and, as prices rise, the potential returns on residential real estate diminish. Consequently, Fiserv Case-Shiller projects a small, short-term price decline for many markets that recently experienced double-digit appreciation."

About Author: Ashley Harris

Ashley R. Harris is the Editor-in-Chief for MReport and TheMReport.com and the acting Editor-in-Chief of DS News and DSNews.com. Ashley has years of experience as a financial writer having worked at The Houston Chronicle and Newsweek. She received her B.S. in journalism from the University of Houston and her M.S. in journalism from Columbia University School of Journalism.
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