Property values continue to drift down. But analysts say relief could come by year's end.

By Pat Mertz Esswein of Kiplinger's

The lowest mortgage interest rates in almost 60 years, plus affordable homes in cities where buyers had been priced out for years, should be turning the housing market around. But the market also labors under heavy burdens, such as high unemployment, tight credit and a glut of foreclosures that are dragging down home prices.
Sales fell off a cliff after the homebuyer tax credit expired. And legal squabbling about the process used to repossess many homes postponed the sale of many foreclosed properties and struck yet another blow to confidence in the housing market.
For the four years beginning with the downturn in mid-2006, the median price of an existing home nationwide fell by 27%, or 7.7% annualized, according to Fiserv Case-Shiller, a home-price research firm. December's median home price was $168,800, a bit more than in 2003.

Stuck underwater
The home-price plunge has left 23% of the nation's 53.5 million borrowers underwater, meaning they owe more on their mortgage than their home is worth. Unless they can ante up the difference — an average of $75,000, according to CoreLogic, which analyzes mortgage data — they can't sell, and they can't move. Their choices? Stick it out; ask the lender for permission to sell for less than they owe, aka a short sale; or default.