National Realtors: Prices will rise in '12

Home prices will rise next year as pent-up demand meets falling inventory, causing a prolonged "overcorrection" in pricing to end, the National Association of Realtors forecast Friday.

"There is a sizable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can't continue indefinitely," Lawrence Yun, chief economist for the trade group, told reporters Friday at the association's expo in California. "This demand could quickly stimulate the market when conditions improve."

Yun predicted "moderate appreciation," based on a forecast of 1.7 million to 2 million new jobs next year; a 2.2 percent uptick in the value of the nation's goods and services produced; and a 4 percent to 5 percent increase in the number of homes sold.

In the past few years the trade group had been overly optimistic in its forecasts. But this week a division of the Moody's credit ratings agency predicted a bottoming out of Long Island prices as early as the third quarter of 2012.

The Realtors' optimism over a home-price recovery next year wasn't shared by Bay Shore-based appraiser Bill Collins. "Goodness gracious, they are so lost in space," said the president of All Island Appraisal and Realty. He predicted depressed prices because many house hunters don't qualify for mortgages and many foreclosures will be dumped onto the market.

He said he's done upward of 1,000 appraisals this year, and while prices are stabilizing in a few neighborhoods, very few properties have risen in value: "Outside of Fire Island and outside of the Hamptons, I cannot think of a single community where we've said things have improved in the past year."

But in Bohemia, real estate broker and builder Patrick Curtis has been getting more calls from buyers, and fellow builders told him this week they were raising prices by $25,000 per home due to demand.

Curtis, who owns Suffolk Realty Group, said better times will come next year after the presidential election, because consumers will be optimistic about bipartisan efforts to fix the economy.

Separately, the trade group released another study that showed buyers were "staying well within their means." "The median price paid by repeat buyers in the survey was 2.1 percent higher than in the 2010 study, but their income was 11 percent greater, despite lower interest rates," said Paul Bishop, association vice president of research. "First-time buyers paid 1.9 percent more, but their income was 4.2 percent higher."