Home prices hit bottom in the first quarter, but will remain flat for the rest of this year and into next, according to a new forecast from Bank of America/Merrill Lynch.
“Our view is that we have actually seen a bottom in the first quarter of 2012,” said Christopher Flanagan, head of U.S. securitized research at B of A/Merrill Lynch.
Speaking at an American Securitization Forum conference in Washington this week, Flanagan said he expects values will increase by just 0.5% this year and 0.3% in 2013, using the Case-Shiller home price index as a benchmark.
“We have hit bottom but we are going to bounce along for a couple of years,” the managing director said.
Flanagan noted that distressed sales will continue to weigh on residential values. He estimates that 5.6 million in delinquent mortgages could be liquidated by yearend 2015. But he noted that estimate could be reduced by loan modifications and efforts to turn REO properties into rentals.
Home values should get a lift after 2013, rising 3% in 2014 and 6% in 2015, Flanagan told National Mortgage News.