Following declines in home prices over the past year, 2012 real estate values are not likely to head up either, say more than 100 economists and housing experts who responded to a Zillow Home Price Expectations Survey. In fact, those analysts are predicting another 12 months of declining prices before a “relatively steady annual appreciation rate of roughly three percent” begins in 2013 and continues through 2016[1]. Stan Humphries, chief economist at Zillow, says that 2012 will be a continuation of the “prolonged bottoming process” that began with the housing crisis and has been prolonged by “negative equity, unemployment and low consumer confidence.” Since July 2006, national home values have fallen 31 percent and nearly a third of all homeowners are living in properties that are underwater at the present time[2].

It should be noted that another 12 months of declining prices is not necessarily as bleak an outlook as you might first think. In fact, for many it could be a relief to at least have an end in sight, and about 25 percent of those surveyed predicted that when the end comes (presumably sometime in 2013) home prices might rise by about 18 percent in five years. Of course, the other extreme predicted that in five years they would be 1.4 percent lower. The upshot of the matter is that the majority of economists and market strategists are beginning to drop hints about light at the end of the tunnel. Do you think that the housing market will start a recovery soon? Has it already started?

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