Don’t Expect Recovery in Home Prices in 2012: Survey

The long anticipated recovery in home prices will have to wait another year as the housing market weighed down by foreclosures finds a bottom in 2012, according to a Reuters poll of 23 economists and analysts.
The group agreed strongly that the there would be no change this year in the widely monitored S&P/Case-Shiller home price index, Reuters said. The last poll taken in November projected a median 0.3 percent decline.
The survey found some agreement that a weak recovery would commence for the beleaguered housing market in 2013, more than five years after the onset of the financial crisis started a downward spiral of home prices by a third or more for most homeowners.
But the gain for 2013 would be an unimpressive 1.5 percent, the survey found.
The prolonged foreclosure crisis and plummeting prices have created a swelling class of “underwater” homeowners who owe more than the current value of their homes.
This group of borrowers in negative equity – by some estimates amounting to a third of U.S. homeowners – have been unable to take advantage of historically low mortgage rates as credit standards have tightened and high unemployment as been persistent.
Fifteen of 20 Reuters survey respondents said monthly foreclosures should decline this year, while five didn’t see any rebound until 2013.
Survey respondents were evenly split on whether the Obama administration would initiate a new plan this year to support housing under government-run mortgage finance firms Fannie Mae and Freddie Mac, both of which are on a running bailout tab with the U.S. Treasury that will likely surpass $200 billion this year.

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