US home values may still be declining -- prices fell 0.8% in 20 cities in March from February -- but some economists believe that the market will be reaching its bottom soon.
The continued price drop pushed Standard & Poor's Case-Shiller Home Price Index 33.1% below its peak in 2006, and to a record low.
Even the experts who believe that the market will soon reach bottom don't expect things to get better immediately. But they are encouraged by "favourable signs", as Paul Dales of Capital Economics puts it, that the market is close to the point where things will no longer get worse. Housing is undervalued and there is "a lot of pent-up demand for housing and someday it will be unleashed," says James F. Smith of Parsec Financial. As to when that day will come? Nobody knows, but the experts don't predict a date earlier than a few years from now.
Other experts, though, still see no end in sight for the market freefall, owing to such factors as the housing oversupply and low consumer confidence. Dean Baker of the Center for Economic and Policy Research predicts a 6% to 8% drop in prices this year.
According to the Case-Shiller report, the national housing index fell 4.2% in the first quarter of 2011 after falling 3.6% in Q4 2010 -- another record low for the recession.
Source: New York Times