With more inventory in foreclosure pipeline, three-year home price slide expected

As more homes nationwide work their way through the foreclosure pipeline, economists are growing concerned that a growing shadow inventory — homes that are in distress and face a foreclosure-driven sale — could hamper progress on home prices. Estimates show that as many as 12 million more properties may soon hit the market, as the foreclosure crisis resolves, which could lead to three more years of dropping prices. Oliver Chang, a U.S. housing analyst with Morgan Stanley said that burgeoning inventory may prevent the market from reaching bottom. “Whether it’s the sidelined, shadow or current inventory, the issue is there’s more supply than demand,” Chang said. Mark Zandi, chief economist with Moody’s, said that prices will drop another 5 percent by 2013 and may not recover for a decade. [Bloomberg]