Home Price Forecast 2002: Bouncing Back? --- Despite Economy, Home Prices Again Start Gaining Ground; But `Fire Sales' In Denver
CAN PRICES GO any lower in San Francisco? Will war benefit home sellers in Los Angeles? And how much more expensive will homes nationally be this year than last?</br></br>The answers: Yes, maybe and just a bit, according to the most recent Home Price Forecast done by Case Shiller Weiss, a Cambridge, Mass., research firm, for The Wall Street Journal. But while many industries across the country are still hurting from the recession, the economists think real estate may be leading the way back up. Home prices nationally will once again climb over the coming year, by an average of 2.8%. In fact, out of the 20 cities tracked, only two won't see prices rise, the forecasters say.</br></br>Still, the upswing will be remarkably varied across the country, with some cities, such as San Diego, barely squeaking ahead (prices are expected to go up by just 0.8% there), while others, like Washington, D.C., should boast a robust jump of more than 7%. And though prices usually go up in the spring, Case Shiller Weiss predicts that in most places they won't climb until the second half of the year. "We're not out of the woods yet," says the firm's Karl Case, who takes into account past sale prices, the number of homes on the market and the number of people setting up new households when making his predictions.</br></br>Patrick and Sharon Brem discovered that for themselves when they recently tried to sell their loft in downtown San Francisco. That market has been one of the hardest hit in recent months and the economists say prices will drop by an additional 5.7% this year, making it the only city in the survey where they'll actually fall. The Brems were asking $969,000 for their place, but settled for $730,000 -- or exactly what they paid for it two years ago. "We consider ourselves lucky to get out when we did," says Mrs. Brem, an Internet developer. A lot of people haven't been able to find buyers: The number of sales there fell by 27% in November from the year before.</br></br>Home prices were flagging even before Sept. 11 -- in the first quarter of 2001, the National Association of Realtors found that prices had started downward in more than a quarter of the 128 major metro areas it tracks. And they were down in the immediate aftermath of the attacks -- September median new home prices dropped 5.1%, while those of existing homes fell 3.6%. But overall, the housing market has held its ground remarkably well despite the shaky economy, propped up by numerous interest-rate cuts and consumer faith in the housing market. During the third quarter of last year, inflation-adjusted prices nationally rose 6.1% from a year earlier, according to the federal government.