Home Prices To Drop Even More

CR Daily News Prediction© REAL ESTATE (Predicted August 29, 2010)

REAL ESTATE - Although housing helped lead the U.S. out of previous recessions, now one in 10 homeowners with a mortgage has missed a payment. At the same time, the percentage of people getting a foreclosure notice went down a little, the first drop in 4 years and mortgage rates keep dropping to record lows. Is the situation getting better or worse?

Predictions from Higher Intelligence: - “Real estate is facing a conundrum. With low interest rates and huge bank inventory, buyers see many “good deals.” However, many buyers believe prices will continue falling, making those deals even better in a year. So they will wait, forcing prices down more. Declining prices mean more people will go upside down in their homes and walk away causing more inventory for the banks. And the cycle will keep repeating for the next few years. Housing prices may not go up for 10 years.”

Commentary from the Mediums: Sellers will have to keep lowering their prices to compete with bank inventory or not sell at all. Last week, existing home sales hit a 15-year low while inventory hit a 10-year high. The low-to-mid end of the market, the largest part of the housing market, will be hit the worse. Fewer foreclosure notices is just banks trying to slow down the incoming inventory of the real loan defaults…a temporary bandage.

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