Despite concrete signs that the real estate market is slowly getting back on its feet, experts are predicting that the average United States home price will continue to fall by 6% by September, 2011. The 6% comes after the 27% decline we have already experienced over the last three years.
Projections of the decline will occur during the typical slow summer months of this year. After that period, prices should begin to stabilize and keep that pace through the fall of 2011. The continued decline is mostly due to the staggering amount of foreclosures that are still plaguing this country, and will continue to do so. As foreclosures hit the market and add to the already ample inventory of homes for sale, that adds more choices for buyers and will force sellers to drop their current listed prices.
Two federal programs which have been helping aid the real estate market, will also come to an end shortly, thus driving prices down even further.
The homebuyers tax credit which had been extended from its original date of November 2009, will expire come June. To qualify for the credit, homebuyers must sign a contract before April 30 and close by June 30. After April 30 passes, a lot of prospective buyers are expected to abandon the market altogether, thereby weakening the demand for homes.
The Federal Reserve has been purchasing securities backed by mortgages since early 2009, about $1.25 trillion worth. This has kept a firm hold on rate increases by providing a ready market for the securities. However, this program is set to expire on March 31, when it will be turned back over to private investors, who you can bank on demanding higher rates. Higher rates will inevitably cause a lot of buyers to look for lower priced homes, while other buyers will withdraw completely. As a result, demand for homes will drop along with their prices.
While dropping home prices as a result of these two components is not good news for sellers or even buyers, it is only temporary and experts are hopeful, as well as confident, that average home prices will begin to stabilize after the usual slow summer season is over.
Tina is the Broker Owner of Tina Fountain REALTORS in Atlanta, Georgia. For more information on Tina or Atlanta real estate visit tinafountain.com.
We are not the FHA, VA, USDA, HUD or any other government organization. The content on this blog is intended for information purposes only. 
You make a some good points supporting a decline. How about the pressure in commercial real estate? Can’t be good for home prices either.