Not only is the home price forecast an important statistic for homeowners across the country, it is also a vital barometer for measuring just how the economy and the banking system is doing—and it seems it’s not doing as well as some had hoped. At this point a year ago, many government and private economic groups had predicted that the home price forecast, especially by late 2010, would begin to look a little rosier. Well, as you know, that didn’t happen, and most experts now agree that the home price forecast will continue to look dismal through the early part of 2011 and perhaps beyond.

The Home Price Forecast  for 2011

In a recent study conducted by the large mortgage insurance company, PMI, the median home price in the United States, in at least half of the country’s largest cities, is expected to continue to drop at least through the first quarter of 2011. Citing staggering unemployment rates and an unprecedented number of foreclosures, PMI believes that the number of people able to qualify for a new home purchase, and the stricter lending practices of banks and mortgage lenders, will have more people staying put for at least another year, and this decreased demand will be reflected by falling home values.

PMI, which is based in Walnut Creek, California, predicts that in at least thirty of the fifty largest metropolitan US cities, there is at least a 75 percent chance of home prices falling even further than they currently sit, at least through the end of March, 2011.

Moreover, this gloomy home price forecast is expected to affect each part of the country equally. From as far west as California, east to Florida, and everywhere in between, the simple laws of supply and demand indicate continued struggles in an already sluggish housing market.

In the latest economic figures, unemployment in the United States had risen to 9.6 percent and the US has now lost a reported 7 million jobs from its economy since December 2007. Add that to the over 1.8 million foreclosed homes and you have the perfect recipe for a depressed home price forecast. In fact, In June of this year, analysts from Deutsche Bank AG released a report predicting that median home prices in the United States will drop a whopping 47.1 percent from their peak by the time this economic crisis has ended.

While the whole country will undoubtedly suffer from the ongoing global financial crisis and the latest home price forecast, Florida and California seem to be the two states most affected. Each of these states had five cities make the list of the “15 cities with the highest probability for a drop in home prices,” with a statistical probability of 99 percent.