What’s ahead for Home prices in 2012

What's ahead for home prices in 2012 (© Fuse/Getty Images)

The bleeding is just about over, but don’t expect a speedy recovery.

The median home price in the U.S. has plunged nearly 40% in a little more than five years, but the worst is over: The market has finally wrung out the last excessive valuations born of the housing bubble. Before you break out the party hats, note that this doesn’t mean prices across the nation are poised to rebound any time soon. (Bing: What’s the median home price in your area?)

Alex Villacorta, director of research and analytics at Clear Capital, a provider of real-estate data, says the housing market is in a “suspended state,” with positive and negative factors offsetting one another. But he says he doesn’t expect another free fall in prices, assuming “things are left to work themselves out and there are no further shocks to the economy.”

Although the percentage of sales of distressed homes is expected to rise, the federal government’s latest loan-modification program might allow as many as 2 million homeowners to refinance, says Mark Zandi, chief economist at Moody’s Analytics. Zandi says that further home-price declines nationwide will be limited to 3% to 5% and that 2012 will be the year that prices finally stabilize, setting the stage for gains in 2013.

 

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