In the years leading up to 2014, some of the regions and cities hit hardest by the housing bust experienced huge gains—essentially an overcorrection to the correction. In 2014, among cities that experienced double-digit price growth, Detroit topped the list with a gain of 20.9%, followed by most of California (including San Jose and San Francisco, the nation’s most expensive housing markets), Atlanta, Miami and Las Vegas. Yet prices in many cities are still significantly lower than they were at the market’s peak in mid 2006. And across the U.S., home prices are still 23% lower, on average, than they were in 2006. During the correction, home prices fell so far that most metro areas were undervalued compared with what they would have been if they had just plugged along without a boom or bust.
That doesn’t necessarily mean that they are undervalued now, says Andres Carbacho-Burgos, a senior economist with Moody’s Analytics who covers housing. Most metro areas are about where they should be, he says. Kiplinger forecasts that home prices nationally will rise by 3.5% in 2015, at the low end of the historical range of 3% to 5% annual appreciation (before inflation). We also expect existing-home sales to increase 8% in 2015 (after declining 2% in 2014) and new-home sales to rise 25% in 2015 (after a meager 4% rise in 2014).
Read more at http://www.kiplinger.com/article/real-estate/T010-C000-S002-housing-outlook-2015.html#ZQKttGFlhdoBfRjk.99