Real estate prices have been relatively stabilized over the last few quarters due to a combination of government stimulus and low interest rates; but that support for the market can’t continue forever. The housing prices are apparently on the verge of rising again, according to many experts across the nation.
The first big blow to the housing sector is the ending of the government’s tax credit stimulus at the end of April, this spring. The extension of this stimulus from last fall up until this spring has definitely made a difference to the market this winter, but the support that it’s given the market will likely end when the tax credit program expires.
Unfortunately, in the months to come there is also a predicted wave of foreclosures that are anticipated to come crashing down on the market. The struggle for mortgage modification is not working out as the government had planned; many homeowners can’t qualify for the help and many of the lenders involved have been very slow to help homeowners who have defaulted on their mortgage payments.
Some of the anticipated foreclosures are also likely to be a result of some of the same issues that have been resulting in an excess of bank owned properties in this previous year. Home owners will increasingly have under water mortgages and as a result, many home owners will walk away from their homes.
One of the other problems is that home owners are taking out adjustable rate mortgages which often have very low payments for the first year or so and then adjust to a higher rate of interest. While the interest rates are low, they can allow some great savings on your monthly mortgage payments; but once the rates climb, they can be overwhelming. Because the current interest rates are very low, it makes little sense to use an adjustable rate mortgage currently; the low rates will likely be ending in the spring as the Federal Reserve program which is in place now ends.
All in all, there are a lot of factors that are more than likely to adversely affect the real estate market in the months to come. However, there is the possibility for recovering housing values in later parts of the year; it is anticipated that later in the year foreclosure rates to drop as well as the numbers of people who are unemployed. With more people across the country enjoying more financial stability it is likely that the market can begin to stabilize by the end of the year.
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Article Source: ArticlesBase.com - Home Prices Expected to Take a Tumble in the New Year