San Francisco #2 in Improving Home Prices

Forbes magazine just released a list of the top 10 cities it says are showing the most improvement in home prices. San Francisco was rated second, just behind Minneapolis, Minn. San Diego and Los Angeles came in at numbers 6 and 7, respectively. The west, in general, was well represented, with Phoenix (#5), Denver (#9) and Seattle (#10) also making the list.

San Francisco home prices increased 2.8% from July to August this year. Home prices there will drop 8.3% by next June, but will increase 14.3% by 2011. After the area works though its supply of foreclosures, it will be prepared to recover, according to First American Core Logic.

Despite improvement nearly across the board, it’s unclear if the real estate recovery will gain momentum. While some economists believe home prices have hit bottom and are improving, others say price increases are not sustainable because of continuing high unemployment and the demise of the first-time buyer’s tax credit, scheduled to end this year. Both factors, Blitzer said, may have a dampening effect on home prices.