According to Business Week, three years
should be enough to recover from the housing crisis, with the market
rebounding in 2012. David Wyss, Standard & Poor’s chief economist, said,
“We expect prices to drop for another year and then stabilize before
starting to rise with incomes.” Based on the National Association of
Realtors national median home price of $180,000 for the fourth quarter
of 2008, the median price for the end of 2009 is expected to be
$152,000, and then rebound to $179,000 by the end of 2012.

Although the U.S. housing market begins to show signs of recovery with
the pending home sales index spiking to 6.7 percent in April, Mike
Mandel, chief economist at Business Week, said foreclosures are now
popping up in the higher end of the housing market, which will further
delay recovery. Since the unemployment rate has jumped to 4.4 percent
for those with bachelor’s degrees or higher, more than double the rate
of 2 percent a year earlier, homes at the higher end of the market are
either not selling or falling into foreclosure. “There is a 40-month
supply of homes that are $700,000 or higher,” said Peter Coy, economics
editor for Business Week. According to a May 28 report from the
Mortgage Bankers Association, prime fixed-rate loans now represent the
largest share of new foreclosures on the market. [more]