Long Island home prices could hit bottom in the third quarter of next year, then start rising at normal rates within two to three years, according to a forecast by Moody's Analytics.
That's how long it would take for the Island to absorb the "shadow inventory" of foreclosures in the making, said Marisa DiNatale, director of research for Moody's Analytics, part of the Moody's credit ratings agency.
A flood of foreclosures will drive down home prices by 6 percent during the next 12 months or so, a sharper decrease than the national average of 3 percent, according to Moody's forecast for the Island.
By early 2015, sale prices on the Island will likely show increases of 3 to 4 percent annually, marking a return to normal rates of property appreciation, DiNatale said.
Data from various sources show as many as 49,000 homeowners are in foreclosure courts here or at least 120 days behind but not yet in the foreclosure process.
Foreclosure activity has been slowed down by last year's scandals over lenders' sloppy documentation, but many experts said the delays won't last.
Loan servicers had been "completely overwhelmed" in reviewing all their existing foreclosure cases, DiNatale said, but now they're finishing reviews, starting new foreclosure cases and pushing properties to auction.
"There's going to be a flood of foreclosures," the researcher said.