U.S. home prices to keep fall through 2012

U.S. home prices will continue to decline right through 2012 and possibly in 2013 as negative equity and weak job growth hinder a real estate recovery, according to a survey by Zillow Inc. 

The real estate data provider surveyed more than 100 economists, property experts and investment and market strategists.

After 2013, prices may rise about 3% a year through 2016, which is slightly below appreciation rates experienced before the residential market collapsed, Zillow said.

Home prices have not reached the bottom

The survey is based on the projected path of the S&P/Case-Shiller U.S. National Home Price Index over the next five years. Home prices have fallen 31% from a July 2006 peak through September, based on a Case-Shiller index of values in 20 U.S. cities.

“There is a consensus among the nation’s top housing experts that we have not yet reached a bottom and are instead working through a prolonged bottoming process,” Stan Humphries, Zillow’s chief economist, said in the statement. “Negative equity, unemployment and low consumer confidence remain the key factors delaying a true recovery.”

About 29% of U.S. borrowers had negative equity, or owed more than their houses were worth, in the third quarter, Zillow data show. The nation’s jobless rate, 8.6% in November, was 9% or higher for all but three months in the last two years.

Panelists’ expectations for the period ending in 2016 varied widely, Zillow said. The most optimistic quartile projected about 18% growth in home prices over the next five years, while the most pessimistic forecast a 1.4% decline.

The bottom line is don’t be tempted to invest in the USA, no matter how cheap property prices may seem there today.

Source: Investment News 


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