I have a dear friend who is “big” on real estate. He owns several houses here in the San Francisco Bay Area and has been a long term landlord. In fact, he is currently eyeing some new homes for sale in top neighborhoods which are now selling for a song. Being that he’s a real estate investor, he closely monitors the housing market reports and is kind enough to share some of those reports with me.
He’s brought to my attention some reports that indicate that the housing market will most likely get worse over the next few months, due to more foreclosures. According to some economists, we can expect a further decline in home prices by the third quarter of 2010.
If you take a look at the S & P / Case-Shiller U.S. National Home Price Index, which is the index that tracks the U.S. residential housing market by measuring real estate pricing changes for 20 metropolitan areas in the nation, then you’ll see that prices peaked in 2006 and carved out a bottom in early 2009. But there is some speculation that by the latter half of 2010, we’ll see prices sliding again based on expectations that people with negative equity won’t be able to hold on to their homes much longer.
S & P / Case Shiller U.S. National Home Price Index
Image from StandardAndPoors.com.
At this time, troubled homeowners are hoping that loan modifications will help them resolve their housing issues. But when these loan modification applications are fully analyzed, mortgage lenders will likely determine that many of the applicants won’t be able to qualify for these restructurings. Plus, there are indications that the job market may continue to stay bleak. If all these events hold true, then we may have to brace ourselves for more bad news on the housing front.
Here’s hoping that things DO start to look up! May 2010 prove these predictions wrong.
For related discussions on this topic, please check my articles:
- The Upside Down Mortgage: Would You Walk Away?
- Can A Housing Assistance Program Prevent Foreclosure?
- Our Mortgage Bailout and Rescue
- 4 Ways To Survive The Credit and Mortgage Crisis
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