Report: Tacoma best place to buy home in next two years

The City of Destiny has risen to the top.

Financial-data firm Fiserv reported that Tacoma home prices are expected to rise by nearly 25 percent by spring 2013, leading all U.S. cities in home appreciation over the next two years.

How is that possible?

“According to the Fiserv / Moody’s Analytics forecasting model, homes in the Tacoma metro area are substantially undervalued,” said David Stiff, Fiserv’s chief economist. “Single-family home prices have dropped 32 percent from their peak level in 2007. Although the metro area’s job market remains weak, the long-run prospects for job, income, and population growth in the Seattle-Tacoma area are good.”

The study showed that growth is regionally concentrated in the Pacific Northwest and Central Florida. Fiserv, which published the report along with Moody’s Analytics, also listed Seattle-Bellevue-Everett as its No. 3 pick.

Stiff said cities like Tacoma and Seattle have strong, diverse economies and should fare well over the next two years. Areas like Palm Bay-Melbourne, Florida; Tucson and Memphis that were hammered by price declines but now are seeing strong interest from investors, Stiff said.

Despite the dismal picture for the national economy, Fiserv predicts U.S. home prices will finally start to turn around by early next year. It forecasts home prices in 384 U.S. metro areas will rise by an average of 2.7 percent between the first quarter of 2012 and the first quarter of 2013, with 95 percent of those metro areas showing gains in that time period.