By Amanda Gengler, Money magazine writer
November 9, 2009
(Money Magazine) — After three years of slumping house prices, the end of the real estate bust may finally be in sight. Home sales are rising, inventories are shrinking, and most economists believe values nationwide will hit bottom in the second half of the year — but not before falling another 5% to 10% first.
Prices after that should stay mostly flat until 2012. "Next year will clearly be better than this year," says Mike Larson, a real estate analyst at Weiss Research. "Prices may drop a little more, but the lion’s share of the damage is behind us."
One positive byproduct of the 30% plunge in prices since the 2006 peak: Houses are now more affordable than at any time in the past two decades, according to the National Association of Home Builders — good news for anyone looking to buy.
Then too, mortgage rates, now at 5.15%, should stay low for the first few months, thanks in part to the Federal Reserve’s ongoing purchase of mortgage-backed securities. But if the economy really picks up steam and inflation fears resurface in the second half of the year, rates could rise as high as 5.25% to 6.5%.
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