At some point, everything stops falling

Home prices should begin an uneven rebound next year, says a forecast compiled for Businessweek.com by Fiserv and Moody’s Economy.com

Taking into consideration such factors as employment, foreclosure rates, income growth, demographic trends, and construction costs, Moody’s Economy.com and

Brookfield (Wisc.)-based financial services industry information firm Fiserv (FISV) estimate that by 2014, U.S. home prices will be 7.2 percent above 2010 levels, with the strongest growth in the Pacific Northwest.

Stiff says he expects to see home prices bounce up and down near their lows for the next two to three years, especially in the markets that experienced the largest price bubbles.

The most robust market in the forecast is Washington State’s Bremerton-Silverdale area, a quiet naval community across the Puget Sound from Seattle. Home sales and new construction in the area have slowed in 2010, but Fiserv and Moody’s Economy.com expect prices there to shoot up by a total of 44.7 percent over the next four years—9.7 percent annually—the highest forecast among 384 metropolitan statistical areas surveyed nationwide. Price levels have fallen about 21 percent from 2007 peak levels, according to the Fiserv Case-Shiller Indexes.

One factor setting Bremerton-Silverdale apart has been a stronger economy than the rest of the U.S. The unemployment rate in the area is 7.2 percent, compared to 9.5 percent nationally.  Bremerton’s military has also helped to sustain employment. The Naval Base Kitsap and the Puget Sound Naval Shipyard provide a lot of local jobs. While the area has a large number of foreclosure and pre-foreclosure homes, the market is less dominated by distressed sales than many other markets.

Washington’s second-strongest market is Tacoma, with a growth rate expected to be 33.1 percent. Prices in the Seattle area are expected to grow 25.5 percent by 2014.

At some point, everything stops falling. Sometimes things hit bottom with a thud and just lie there in a heap. Sometimes they bounce back up at least part of the way. The U.S. housing market is in the latter camp. Remember the old saying, buy low and sell high?  Call me if you want to get on board and make some money!