After years of wild swings, the U.S. housing market is slowly returning to normal.
The latest forecast from Fiserv (FISV) Case-Shiller predicts home prices will increase by an average of 3.3% annually over the five years ending September, 2017.
“2012 was the first year since 1997 that the housing market has resembled something [close to] normal,” said David Stiff, Fiserv’s chief economist.
“For the past 15 years, home price changes and sales volumes have either been boosted by a bubble mentality or crushed by crash psychology.”
From 1998 until the housing bubble peaked in 2006, home prices grew by 5% or more a year. But once the bubble burst, home prices plunged, falling 30.5% through the end of September 2012.
It wasn’t until late 2011 that markets started to stabilize, according to Stiff.
Between September 2011 and September 2012, average U.S. home prices rose 3.6%.
By then, 62% of the 384 metro areas Fiserv tracks reported rising home prices, up from just 12.5% of all markets during the same period a year earlier.
Many of the metro areas hit hardest by the housing bust recorded the biggest price gains during those 12 months.
In Phoenix, for example, prices climbed back by nearly 21%; prices in Detroit rose almost 16%; and homes in San Jose, Calif., gained 12.5%.