When Will U.S. Home Prices Finally Stop Falling And Begin To Rise?

Even with the U.S. Fed holding interest rates down to some of the lowest levels since the Great Depression, prices continue to fall as the job market is weak, middle class incomes are stagnant, consumer debts are high and foreclosures mount. In this environment, what will it take to reverse the downward trend in pricing and when?

Of course a much stronger job market, higher wages and a continued pay down of consumer debt would be a huge boost. But the foreclosure backlog at Fannie, Freddie and the banks is huge and it too must be dealt with. One way is for lenders to sincerely work with homeowners who are struggling to make their mortgage, taxes and insurance payments, which means either writing down a portion of their mortgages or extending and restructuring those mortgages to make them more affordable, so fewer people lose their homes. But for those people still making their payments, when they learn others got a break, they too will demand one.

The second way is for Fannie, Freddie and the banks to finally have a blowout sale of their mountain of foreclosures, so that investors will buy them and put them back on the tax rolls. To make this more palatable, there can be a rule requiring investors for a period of time to lease these homes out, so they don't get flipped into the market driving down prices further.

Until then dear reader, I don't see U.S. home prices rising in the immediate future. If you need to sell your home, please consult with a local real estate professional, but price it to sell now, rather than to ride the declining prices down further.

Dick
To learn more, please see "Home Prices Hit New Depths," The Wall Street Journal, 2-29-12 http://online.wsj.com/article/SB10001424052970204520204577251090065551210.html