As we anticipated, U.S. major market homes prices hit their lowest levels since late 2002. This according to Standard & Poor's Case-Shiller Index for January, which was just published. But the most interesting fact is the cost of paying a mortgage, for those who can qualify for a mortgage, is falling below the cost of rent, in many areas.
This will spur some buyers back into the housing market, which for now is largely driven by investors snapping up foreclosures and short sales (mortgages discounted down to declining housing prices to get homes sold), and then renting those homes out.
The overhang from a mountain of Fannie Mae, Freddie Mac and big bank foreclosures still kept off the market will for now continue to press down values, as will massive unemployment and underemployment. But if you are considering buying a home, and willing to stay long term, this could be a very good time to buy, especially with the microscopic 4% interest rates on 30 year fixed mortgages.
Despite the craziness that overran the real estate market in recent years, which claimed prices could only rise, followed by the huge market collapse, over time, real estate, like every other market goes up and it goes down. It has been down for so long, the upside probability is beginning to manifest itself.
Dick
To learn more, please see "Home Prices Fall, but at a Slower Pace," The Wall Street Journal http://online.wsj.com/article/SB10001424052702303404704577307300388803654.html
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