Magazine article American Banker

Home Price Bottom Forecast for 2012

Magazine article American Banker

Home Price Bottom Forecast for 2012

Article excerpt

Byline: Kate Berry

Home prices will decline another 5% this year and hit bottom in early 2012 in a "best case" scenario, assuming home sales pick up in the second half of this year, according to analysts at JPMorgan Chase & Co.

But many factors could worsen that relatively optimistic forecast, says John Sim, a JPMorgan Chase fixed-income strategist.

"We can easily see a 10% decline, and I think the mortgage bond investor community prices in that risk," he says.

The economic slowdown, high unemployment, tight lending and the massive overhang of homes in the foreclosure process have "cast an ominous shadow over the housing market," Sim says.

Prices have stabilized somewhat because sales of foreclosed homes have slowed dramatically in the past year. But without a fundamental uptick in demand for new homes, the supply could easily increase as servicers push more houses through foreclosure. That would delay a recovery and "push out the bottom," according to Sim. …

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