NEW YORK--(BUSINESS WIRE)--Link to Fitch Ratings' Report: U.S. RMBS 4Q11 Sustainable Home Price Projection http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679169
Real U.S. home prices are expected to drop by 7.8%, down from the last quarter's 9.1% expectation, according to the latest sustainable home price projection from Fitch Ratings.
However, with steady economic growth, and inflation running close to 3% annually, Fitch believes that home prices will bottom by the end of 2013 and begin a slow recovery.
The economy continues to grow with economic indicators on a positive trajectory and pointing to a recovery. But struggles remain. High unemployment, a declining labor force, stagnant wages, and a large delinquent inventory across many parts of the country are slowing the recovery's momentum.
Regionally, the drastic declines of the last few years seem to be ending in Arizona and Michigan. Arizona posted small quarterly gains for the first time in over two years, and Michigan is stabilizing. In contrast, prices are beginning to fall in the Northeast. For example, with the inventory backlog beginning to liquidate, New Jersey and New York City have dropped 10% and 7% over the past five quarters, with further declines expected.
A state that has flown mostly under the radar during the crisis is Georgia. Second only to a Michigan in real home price declines, Georgia prices are now 32% lower than their 2000 levels. Fitch's analysis reveals two distinct housing markets in the Atlanta area: central city and affluent northern suburbs that have largely held values and a collapsing housing economy across the city's south. Absent a fully recovering economy, Fitch expects continued performance differences between the strong and weak areas of Georgia.
Fitch's latest report, 'U.S. RMBS Q42011 Sustainable Home Price Projection, is available at 'www.fitchratings.com' or by clicking on the above link.
Additional information is available on www.fitchratings.com
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