Housing: Best recovery bets

The average home price is forecast to plummet over the next two years. But these 7 cities are predicted to post gains.

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San Francisco

Median home price: $675,000
Value lost since 2006: 25.7%
Forecast gain by 2011*: 4.8%

The San Francisco metro area has seen its home values drop by a quarter, and the city still has some pain to work through. The city’s median home price is expected fall another 8.3% by June 2010.

After that, however, the market there may come roaring back: Fiserv predicts a 14.3% gain between June 2010 and June 2011. Averaged out, that means a 4.8% gain over the next two years.

One reason for the sharp comeback is that much of the area’s excess inventory will have been sold. It’s already dropped by nearly in half over the past year.

The recovery will be delayed, though, as the area — particularly Oakland and the East Bay — works through its foreclosure problems. During the first six months of 2009, one of every 52 homes had at least one foreclosure filing.

The good news, according to Mark Fleming, chief economist for First American CoreLogic, is that core city neighborhoods don’t have nearly as many foreclosures as those out on the fringe. The steady demand in those communities will serve as a base as other neighborhoods rebuild.

By Les Christie, CNNMoney.com staff writer
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