Following nearly six years of instability, home prices may have finally reached bottom and could rise quickly in the near future.
Prices increased in 151 of the nation's 384 largest metro areas during the first quarter from a year earlier, according to a report from Fiserv, but this was offset by major declines in other markets, causing overall prices to fall 1.9 percent during the period. However, as the housing supply thins, this development is expected to cause a 5 percent surge in values between 2013 and 2014.
"Inventories of single-family homes have dropped below 2.5 million units, the lowest levels since 2004," said Fiserv chief economist David Stiff. "This shrinking supply of unsold homes is nudging home prices upward in selected markets."
Negative equity continues to be a major factor thinning inventories in many areas. Specifically, many underwater homeowners don't have the available funds to cover the difference between the property's value and the balance of their mortgages, while others want to wait for prices to appreciate to maximize their selling profits.
Local housing paints different picture
Although overall prices declined during the three-month period on an annual basis, some local markets experienced significant improvement. For example, property values in Detroit, which was one of the hardest-hit markets following the real estate bubble burst, rose 8.6 percent during the period, while prices in Miami increased 6.4 percent, the report said.
However, not every local market recorded gains. Public property records indicated that home prices in Atlanta, which has maintained one of the highest foreclosure rates in the country for quite some time, plummeted 17.4 percent from the first quarter of 2011, while Las Vegas recorded losses of 7.4 percent.
Weak economy could dampen homebuying activity
Not only has the thinning property inventory weighed heavily on homebuying, but a recent increase in the national unemployment rate could also be a notable factor.
The jobless rate edged higher to 8.3 percent in July from 8.2 percent the previous month, according to a report from the Bureau of Labor Statistics, which occurred despite companies expanding payrolls by 163,000. There are now an estimated 12.8 million unemployed Americans.