Robert Shiller, of the Case-Shiller Index believes "there's a substantial risk of home prices falling another 15%, 20% or 25% more." Mr. Karl Case, the other person of the famed Case-Shiller Index is quoted as saying, "I see [the market] bouncing along the bottom with a slight negative trend."
What gives these men such pessimistic views? Mr. Shiller referenced the government's expected reduced presence of Fannie Mae and Freddie Mac. We read this as a dearth of funding as these agencies currently provide loan guarantees for about 2/3 of mortgages. The expectation is private mortgage lenders will fill the void at a higher borrowing cost-- this will most likely lead to reduced prices in order to obtain a level of affordability.
The possibility of ending the mortgage tax deduction for many homeowners is another reason for the pessimism. This has been a consistent incentive for home ownership and a factor that has driven demand, in our view.
Another issue is the fragility of the current economic situation in the United States and indeed worldwide. The uncertainty related to current events in the Middle East (e.g., Egypt) and the price stability of oil are of immediate concern in regards to sustained economic growth.
Brad Hunter, chief economist for Metrostudy, a housing market research firm, expects home prices to decline gradually throughout 2011, with markets picking up only when hiring increases substantially.
If you are looking to buy or sell a home, please feel free to contact me.
Michael Friedman
Realtor, Certified Distressed Property Expert (CDPE)
Lang Realty
561-247-3550
http://michaelfriedman.rmlsfl.mlxchange.com/?Page=7395217 <--property search link to cut and paste into your Web browser
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