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Where Housing Will Be In 2012

Businessweek: Housing Special Report
June 18, 2009, 5:00PM EST

Home prices are likely to fall for the next year, then stabilize, with a rebound in 2012 as the overall economy takes off again

By Peter Coy, Mara Der Hovanesian, Christopher Palmeri,  Amy S. Choi and  Tara Kalwarski

Americans have not seen a boring housing market since the last millennium. You know—the average, ordinary kind of market where supply just about matches demand, prices are steady, and real estate ceases to be a topic of daily conversation. Instead, we’ve had six years of upside craziness followed by three years of downside terror. Now we’re in a tug-of-war between those who think we’ve finally found a bottom and those who are convinced that the overhang of unsold homes is going to push prices considerably lower.

By 2012 we may finally get back to blissful boredom. With any luck, three years should be long enough for the U.S. economy to recover and for the nation’s housing inventory to shrink to more normal levels. At that point, housing will return to its old ways, with prices governed not by national mood swings and global credit crises but by local issues ranging from zoning to immigration to job growth.

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