The Burns company does not expect any national job growth -- necessary to achieve stable home prices -- until late 2010, with year-over-year job growth expected by March 2011.
"Demand is very weak, of course," Chen says. "When people don't have jobs, they can't buy homes. Lending conditions, although not as tight as they were last fall when the financial markets froze up, remain tight relative to several years ago. For those who do have jobs, it's more difficult to get a mortgage loan now than it was before."
John Burns Real Estate Consulting expects a slight increase in sales activity this year.
"Nationally we will see a bump in existing home sales in 2009, just as a result of the distressed sales," Porter says. "But we probably will see a bit of normalization in 2010. We might see a slight decline in some markets, flattening in other markets."
Affordability returns"If there's any upside to the really rapid drop in prices, it's that it has restored affordability very quickly in some of these markets," Stiff says.
The price declines in markets such as California have been so rapid that it's enticing some homebuyers and investors back into the market. "The majority of those sales are purchases of previous foreclosed homes," he says.
John Burns Real Estate Consulting tracks affordability in more than 300 markets to create its housing cycle barometer, which calculates the ratio between housing costs for the median-priced existing home and income levels. Cities with a 7.5 to 10 (the highest) are seen as significantly unaffordable and no markets in spring 2009 reached that level because of price drops and low mortgage rates.
The highest right now: Baltimore, at 6.5, which is just one of a handful of markets above 5.0.