When Will Housing Finally Hit Bottom? Housing Recovery On The Horizon?

Have you noticed that the national focus on the housing crash has subsided….

…Its almost like Americans have simply come to accept that home prices continue to crash with no clear end in sight. Housing news no longer makes the headlines…almost makes you start to believe that the housing crash is over.

Not even close.

The real bottom line question is…when will home values stop falling…and start leveling off?

Based on an expert panel of 111 leading housing economists there won’t be any sort of bottoming until…2013. Home prices at the national level are now less than 1 percent away from establishing a new post-crash low. Obviously, more home value loss pushes more homeowners underwater. It’s expected that this year there will be 20,000,000 homeowners underwater, 40% of all homeowners with a mortgage.

What will the historic continued erosion of home value value lead to? A huge increase in REO Listings. Also reported today, the Federal government confirmed that January home prices nationally have fallen to the lowest point since May 2004 and they are 16.5 percent below the April 2007 peak during the housing boom.

The Federal Housing Financing Administration found that prices fell 0.3 percent from December to January and for the 12 months ending in January, U.S. prices fell 3.9 percent. Robert Shiller, co-founder and chief economist of MacroMarkets, the firm conducting the monthly survey of experts. The survey is based upon the projected path of the S&P/Case-Shiller U.S. National Home Price Index over the coming five years.

“This uninspiring view must be influenced by the persistently weak market fundamentals – high unemployment, supply overhang, an unabated foreclosure crisis, and constrained mortgage credit”

More from MacroMarkets:

“Many more experts are now projecting a double-dip after witnessing the double-dead cat bounce that came in the wake of expired government stimulus programs. In December, only 15% of our panelists were projecting that a new post-crash low would materialize for national home prices. Now, just three months later, almost 50% foresee a double-dip happening this year, and not a single panelist expects national home prices to recover to the pre-bubble trend in the coming 5 years”

The table below summarizes the panel’s March projections for home prices for the coming 5 years.

Expected Home Price Changes By Year

S&P/Case-Shiller U.S. National Home Price Index

(Mean of all Panelist Responses)

Year-over-Year Cumulative

Year (Q4 vs Q4 Prior Year) (Q4 vs Q4 2010)

2011 -1.38% -1.38%

2012 1.26% -0.09%

2013 2.72% 2.67%

2014 3.19% 5.98%

2015 3.42% 9.64%

Source: MacroMarkets Home Price Expectations Survey, March 2011

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