‘SUBSTANTIAL RISK’ OF 25% DROP -Home prices near 2009 lows — and may fall more
According to the latest report from the S&P/Case-Shiller home price index, and an article from CNN Money, home prices fell 4.1% during the last quarter of 2010 compared to the same time last year. Home prices were nearly 2% lower than three months before even as other parts of the economy improved.
Robert Schiller, who is part of the Case-Shiller group predicts that housing prices will probably drop more, upwards of an additional 15-25%. The article explains: The government is expected to reduce the presence of Fannie Mae and Freddie Mac in the housing market. These agencies currently provide loan guarantees for about two-thirds of mortgages. If they fade away, private mortgage money will have to fill the gap and the cost of mortgage borrowing will surely rise. That will hurt home prices.
This drop brings house prices to near their previous low in 2009 and occurred in 18 of the 20 large cities the index follows. The largest drop was seen in Detroit where home prices fell over 9%.
Read the full article HERE.
