Home prices will likely continue to fall through next year, before finally beginning a weak recovery in 2013 or late 2012, according to the views of over 100 economic and real estate experts.
The group, surveyed this month by Zillow Inc., sees home prices falling another 0.2 percent from their current level before a bottom is finally reached. From there, the group sees prices rising by only 1.75 percent in 2013 followed by continued slow growth, with a total increase of only 9.3 percent through the end of 2016.
"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," said Stan Humphries, Zillow chief economist. "Negative equity, unemployment and low consumer confidence remain the key factors delaying a true recovery."
The report suggests that experts no longer expect continued deterioration in the housing market, but also that any recovery will likely be sluggish, according to the report.
Five-year forecasts vary widely
The survey group, made up of 109 economists, real estate experts, and investment and market strategists, had widely dissimilar views over the trends the housing market will take over the next five years. The most optimistic one-quarter of them predicted an average 18.3 percent increase in housing prices through 2016, while the most pessimistic quartile expected prices to go down another 1.4 percent during that period.
Results of the more pessimistic quartile were skewed by two respondents who predicted five-year price declines of 20-25 percent. Out of the 109, only eight respondents saw prices dropping further through 2016.
"Given the current economic climate and uncertainty around the government's future role in housing, it's not surprising to see such a wide dispersion in long-term forecasts," said Humphries. "As the market starts to stabilize, we should see individual forecasts start to converge."
Officially known as the Zillow Home Price Expectations Survey, the poll was taken the first two weeks of December.