Home Prices To Fall Another 11%?

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I don’t think so – at least not in Chicago.

CNN Money came out with a story today about a Fiserv forecast that home prices will fall another 11.3% nationally by June 2010. Fiserv is a financial information and analysis firm that tracks the housing market among other things.

Having personally declared a bottom to the Chicago housing price decline, I thought I would point out a few things about this forecast:

  • It’s a national forecast. Their forecast for Chicago is only for a 4.1% decline over the next 12 months.
  • A 4.1% decline is pretty small. That’s within the range of error for these types of forecasts and it might never actually materialize.
  • Their forecast is for median prices, which are heavily affected by the mix of houses sold. During this crisis there has been a shift in the mix to lower priced houses and, although that drags the median down, that is independent from price declines of individual houses.

I’m sticking to my original assertion: Chicago home prices have bottomed and there is actually an upward trend now.

Gary Lucido

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