Over the past several months, existing home sales have seen an uptick, but according to a Reuters poll which analyzed 26 leading economists’ predictions, “economists now expect home prices will fall 2.3% in 2011, and then begin a slight recovery in 2012.”
By the end of the year, the total price drop from the peak of the housing market in 2006 will be 35%, they said.
Reasons cited include a rise in “distressed” home sales and “depressed” prices and a doubling in the amount of time it takes to close a foreclosure home.
The economists also noted that this year, there is no tax credit to prop up buyer activity.
“Price expectations are probably more important than foreclosures at this time,” said Donald Ratajczak, Morgan Keegan’s Atlanta-based consulting economist.
According to Reuters, Ratazjczan “noted that prices are rising in San Diego, where foreclosures make up a big portion of sales, and falling in Atlanta, where foreclosures are below average. The difference, he said, is that San Diego buyers see foreclosures as an opportunity, and Atlanta buyers see them as a problem.”
The silver lining? The poll indicates that interest rates will not harm the housing sector.