Rebound in Home Prices May Take Awhile

Housing analysts say that while sales are picking up, home prices are likely to continue dropping at least through mid-2010, and some prognosticators say until 2013.

The pessimists point to a rising number of option ARMs and Alt-A mortgages that are likely to reset in the next 18 to 24 months, leading to still more foreclosures.

"We're about two-thirds of the way through the pricing correction on a percentage basis," says Joshua Shapiro, chief U.S. economist with MFR Inc., an economic consulting and analysis firm. He predicts that prices will fall another 20 percent over the next 18 months.

"This is clearly the worst housing crisis since the Depression," says John Burns, president of John Burns Real Estate Consulting. "I think that once prices bottom out, they're going to stay flat for several years."

Source: Fortune, Janet Morrissey (06/19/2009)