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all has settled over the U.S. housing market. The first-time home buyer's credit has dried up, and home prices are down 29 percent from their 2006 peak. On Dec. 9 the latest release of the Federal Reserve's Flow of Funds data shows the value of homeowner equity in the third quarter of this year at $6.4 trillion—52 percent lower than four years ago.
Judging by the learned consensus at holiday parties—where homeowners swap sorry tales of underwater mortgages and bleak sales—don't count on things getting better in months to come. Hanging over the market is an ominous combination of a weak economic recovery, near 10 percent unemployment rate, an inventory of 8 million or so distressed properties, and uncertainty over the legality of foreclosures by major mortgage loan servicers. Celia Chen of Moody's Analytics (MCO) expects the S&P/Case-Shiller home price index will drop 8 percent from the second quarter of 2010 to the third quarter of 2011. Morgan Stanley's (MS) housing analysts, led by Oliver Chang, figure home prices will decline somewhere from 6 percent to 11 percent before finding bottom.
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