Home prices across the nation are declining. That is the latest news that we have been receiving from the S&P/Case-Shiller home-price index. The index works off of a three month average and this most recent decline has been attributed to a delay of the effects from the expiration of the federal tax credit for home buyers which ended in April.
The 10-city home-price index shows a decline of 0.1% from July to August which puts home prices in the 10 metropolitan areas monitored an average of 2.6% above last year's average prices. The 20-city home-price index posted a decline of 0.2% in August when compared to July which places the 20 metropolitan areas monitored above last year's average prices by 1.7%.
According to a survey conducted by MacroMarkets LLC, of the 109 housing analysts and economists polled, half expect prices to hit bottom in 2011, the other half expect a rebound in prices in 2012. This shows us where the industry experts predict prices will go, down. The nation can likely take a 2%-3% drop in home values without causing significant damage to the market and further stall recovery. Anything more than 2%-3% and foreclosures will surely rise due to the number of homeowners that will find themselves underwater on their mortgages.
In a separate index released by the regulator of Fannie Mac and Freddie Mac, the Federal Housing Finance Agency, staled that home prices increased to a seasonally adjusted annual rate of 0.4% from July to August. That puts their estimates at 2.4% below last year's levels. However, the FHFA only covers single family mortgages through Fannie Mae and Freddie Mac. Their index does not cover jumbo or subprime mortgages.
Regardless of what the indexes say, experts are expecting home prices to decline. While their predictions are not always perfect, they usually are not that far off either. We might see a rebound in prices by 2011 or 2012. Across the nation we will most likely see a steady decline for at least the rest of 2010.
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