I expect a 10% decrease in home prices in 2011.
Declines are sharpest in big cities.
In 2011, there will be fewer people buying homes due to rising interest rates and high unemployment. At the same time, millions of foreclosed homes will be coming to market. When supply exceeds demand, price must fall for the market to balance.
U.S. home prices have fallen for four straight months.
This year is on pace to finish as the worst for home sales in more than a decade. High unemployment and tight credit have kept people from buying homes, despite some of the lowest mortgage rates in decades.
Government tax credits gave the ailing industry a boost this spring. But they expired in April, and in recent months, home prices have begun to dip again.
Millions of foreclosures are forcing home prices down. Many people are holding off on making purchases because they fear the market hasn’t bottomed out, analysts say.
Foreclosures likely will remain high for the next two years, said Mark Zandi, chief economist at Moody’s Analytics.
Several lenders temporarily halted action after evidence surfaced that some used flawed foreclosure documents to take people’s homes. Some banks have resumed foreclosures at a more measured pace.