Housing Prices Predicted to Bottom Out This Year

Housing prices still have a way to drop, but should bottom out by the end of the year, according to a new forecast from Moody's Analytics.

The forecast calls for median prices to drop an average of 10 percent this year before turning around. The prediction assumes that President Obama's and the Federal Reserve's efforts to restart the housing market will have an effect. If not, the turnaround might not come until 2011, according to Moody's Economy.com research service.

Money Magazine is forecasting a broad range in declines in housing markets across the country. Prices are predicted to continue to decline sharply in metropolitan markets in Florida, Arizona and California, with many areas expected to drop an additional 15 to 27 percent by year's end. More modest declines, in the range of one percent or less, and even slight increases, are predicted for parts of the Southeast, Midwest, Texas and outstate New York.

Homeowners thinking of buying homes in areas slated to experience significant further declines are urged to take those predictions into account when making a bid. For example, if purchasing in Miami, Sarasota or Orlando, Fla., where housing values are predicted to drop approximately 25 percent by year's end, buyers should take that prediction into account when making an offer.

The nation's best housing market over the coming year is expected to be in western New York state, with prices in Syracuse, Buffalo and Rochester expected to rise between 0.7 and one percent. The complete Money Magazine 2009 forecast for 100 U.S. housing markets is available here.