4. Merced, CA
Home price forecast (1 year):* 4.4%
Many industry observers may be surprised to find Merced on the list of cities where prices are forecast to grow this year. The Central Valley area is still being battered by brutally high foreclosure rates: One home in 10 received a foreclosure filing last year. Unemployment is also extremely elevated, a 19.8% rate in December.

Perhaps home prices have fallen as far as they can go; they've dropped a whopping 73% from their 2006 high, including more than 22% last year. The median home sold for $113,000 in 2009, an affordable 2.4 times the median household income.
Is this a good time to buy a home in Merced?
Median family income:
Median home price:
Affordability index:
(Median home price/family income 2009)
Prices peaked in: 2006:Q1
Total climb during the boom:
(2000 to peak)
Total decline so far:
(Peak through 2009)
One-year change:
(Q4 2008 to Q4 2009)
Additional price change to bottom: -6.8%
When they'll hit bottom: 2010:Q2
*(Q1 2010 - Q1 2011)
† Data is for Merced, CA Metropolitan Statistical Area
Median home prices are for single-family homes through the third quarter of 2009, the most recent data available, and include sales of bank-owned properties.
Sources: Fiserv and Moody's
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