Patrick Newport, an economist with IHS Global Insight, expects prices nationwide to slide another 5 or 10 percent in 2012, as the foreclosure pipeline gets moving again, dumping distressed properties on the market. Foreclosed properties tend to sell at a discount of 20 to 30 percent, according to several studies.
Lower prices have left many homeowners (especially those who paid high prices at the market peak) owing more on their homes than the properties are worth.
Of course, the lower prices have also made it easier for buyers to afford homes. And once the foreclosure bottleneck is cleared, many low-priced properties will come onto the market, said Patrick O’Keefe, an economist with J.H. Cohn in Roseland, N.J.
“There will be a lot of opportunities for purchasers to get steeply discounted properties,” he said. He predicted prices will stabilize by the end of 2012.
Many buyers have held back because they think that home prices will keep dropping.
“Most people don’t want to buy in a market where prices are falling, because you lose your equity right off the bat,” Newport said.
Mortgage rates, which have been near record lows for several years, will remain below 5 percent, according to most forecasts. Along with lower home prices, the rock-bottom rates have made buying a home much more affordable.
Source: Nashua Telegraph