How close to the bottom are we for home prices?

In a recent post, I mentioned that Calculated Risk has plausibly argued that we’ve seen the bottom for new home sales, new home starts, and residential investment.

CR predicted that home prices would bottom later this spring, although the data for the spring wouldn’t be available until summer.

I suspect there’s simply too much supply and not enough demand for national home prices to bottom that soon.

Zillow certainly agrees with me. See Forecast: Drops in Home Values Less Severe in ‘12 in the WSJ. A snippet:

Zillow’s home-value forecast released on Thursday predicts a drop of 3.7% this year, which only looks like an improvement when measured against the 4.7% drop in 2011. Some markets hammered by the housing bust, such as Phoenix, Los Angeles and Riverside, Calif., should bottom out for home values in 2012, according to Zillow, and might even see a slight increase in values.

But other markets, particularly Atlanta, Chicago, and Seattle, are projected to show significant further home-value declines on a year-over-year basis in December 2012.

In a speech today, Ben Bernanke said the following:

Although it is difficult to forecast future REO flows, we estimate that an additional 1 million foreclosed properties could be added to the REO held by banks, guarantors, and servicers in each of the next few years. These inflows will continue to exert downward pressure on home prices.

From what I have seen so far in Bernanke’s speech (it’s boring!), Bernanke stops short of saying that the downward pressure from REOs will overwhelm any upward pressure on prices — but he doesn’t really seem to point to any specific upward pressure.

So be prepared for continued home price declines. Those declines will probably be small ones.