Friday, January 01, 2010

Home Prices Forecast for 2010

It is going to be rosy in 2010? Is the crisis really over? Note that Prices in the US have risen more than 3% since May (S&P/Case-Shiller).

Before you get that are some important factors that would determine where the home prices is headed in 2010.

1. Will foreclosures going to get worse? We all know that more foreclosures will mean cheaper homes, i.e. more supply the cheaper they come. Watch news about foreclosures and you will have an idea where prices would be in 2010.

Note: Moody's forecast is for only another 8% drop. The worst-hit markets will be the ones suffering the most foreclosures, places like Arizona, California, Florida and Nevada.

2. Interest rates - are they going to rise or fall in 2010. We know there's no more room for it to fall or it will be a "negative" interest rate lolz. So? My guess is it will going to rise minimally.

Note:Some analysts, according to Newport, think rates for a 30-year mortgage will pass 6% next year as the government curtails housing market support.


3. Tax credit. The tax credit for homebuyers is a two-edged sword. It reduces taxes dollar-for-dollar by up to $8,000 for new homebuyers and $6,500 for buyers who already own a home and should support home prices. But it ends at the end of April 2010.

So? You know where it is headed.

Source: CNN