Home Prices Forecast Higher

By Mike Colpitts

Home prices in a larger number of cities are forecast to inflate in value in 2012 as many U.S. cities make inroads towards a housing recovery. Signs of progress are developing in sold home a growing number of U.S. states, including hard hit Florida, Michigan and Mississippi.

Improving conditions in many cities are attributed to growing job creation and higher prices being paid for some commodities, spurring home sales and higher prices as a result of growing demand. Near record low mortgage rates are also pushing the marketplace.

International demand for crops, particularly corn and soy beans are driving the prices to record highs being paid for commodities. The increase has moved into the local economy in the Corn Belt, with Nebraska, Kansas and Indiana home sales picking up. Banks holding off on formally foreclosing on many homeowners as a result of the robo-signing scandal has developed a shortage of discount priced foreclosures, driving the prices in some cities higher.

As the fallout from the robo-signing scandal develops, bankers will increase the number of foreclosures and are already improving the number of short sales with homeowners who are unable to make their mortgages. Average home values in Nebraska are forecast to increase in 2012, with Omaha leading all of the states cities at 3.9%. (See state pages for additional updates.)

Kansas was forecast at the beginning of 2012 to experience higher housing inflation for the year. Kansas cities are making progress towards their projected improvement. Indiana is now forecast to experience higher home values than first projected at the start of the year as an improving economy begins to fall in place.

Strides towards better conditions are also projected in at least one southern state, Mississippi. The real estate crash has been particularly tough on the hard hit Mississippi state economy, which has endured years of economic weakness as one of the nation’s highest prone poverty regions.

Home values are also forecast to improve in cities in Alaska, Oklahoma, West Virginia, Wyoming and Texas, where average home values are forecast to show healthy gains. Most cities experiencing higher home prices won’t see huge price increases, but with growing home sales in many areas higher values will develop.