(SEATTLE) -- The three-year decline in U.S. home values won’t abate for at least another year, according to a national survey of more than 100 economists, real estate experts and investment strategists.
Prices are forecast to continue to decline until the market’s bottom is reached in late 2012 or early 2013, economists in real estate marketplace Zillow’s Home Price Expectations Survey for December reported. U.S. home prices are expected to decline 1.57 percent in the fourth quarter of 2011 after falling 0.4 percent through September, according to those surveyed.
“Unfortunately, when we look ahead to next year, the unabsorbed pool of housing supply, dragging levels of consumer confidence, high unemployment and negative equity will continue to put downward pressure on the housing market, pushing our expectation for a potential recovery into late 2012 or early 2013,” Zillow chief economist Stan Humphries said in a statement.
After 2013, the respondents said they expect a “relatively steady” annual appreciation rate of about 3 percent through 2016, slightly below the appreciation rates during the pre-bubble years of 1987 to 1999.
Homes in the U.S. are expected to lose $681 billion in value during 2011, though the bulk of the loss occurred earlier in the year, according to Zillow. The losses in home values are large, but they are still 35 percent less than the $1.1 trillion drop in 2010.
Meanwhile, Freddie Mac, or the Federal Home Loan Mortgage Corporation, announced on Thursday mortgage rates have remained in record lows. The 30-year fixed rate averaged 3.91 percent for the week, “a new all-time low,” dropping below last week’s 3.94 percent, the previous record low, according to the agency. The 15-year fixed matched last week’s “all-time record low” at 3.21 percent.
Freddie Mac’s chief economist Frank Nothaft said mortgage rates will likely remain very low, at least through mid-2012. He predicted housing activity will be better in 2012, “but not robust.”
“A full-fledged recovery in the housing sector will likely elude the U.S. in 2012, but new construction and home sales are expected to be greater than in 2011,” Nothaft wrote in his predictions for next year.
Distressed sales and “sluggish” home-buying demand will continue to keep prices low in many markets.
“We expect U.S. house-price indexes to move lower before bottoming out in 2012, with modest appreciation forestalled until 2013,” Nothaft said.
He said the rental market appears to be leading the housing recovery, as rental prices have risen in most markets, vacancies have decreased, and property values for professionally managed complexes are up in most neighborhoods.
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