Economists Predict 2.3% Drop in Home Prices

A Reuters poll of 26 leading economists revealed a consensus of opinion about the level of home price drop to expect in 2011.  The expected average drop is anticipated to be 2.3% in 2011 before the housing market begins a slow recovery in 2012.

The economists expect the pace of home sales to grow very slightly from the annualized pace of 5.36 million homes as of January 2011 to 5.86 million units by January 2012.

The total average price drop from the 2006 market high is expected to be 35%.

It is interesting that there are different scenarios playing out in different high foreclosure markets.  In San Diego where foreclosure is a big part of the sales prices are going up, whereas in Atlanta, where foreclosure is also a huge part of the sales, prices are going down. Economist Donald Ratajczak explained the difference as a matter of psychology: in San Diego buyers view foreclosures as an opportunity, while in Atlanta buyers view foreclosures as a problem.