Home prices have fallen to their lowest level or will do so within the next six months, according to 28 economists who were polled by the Reuters news agency in mid-November.
Specifically, 19 of the economists said a “trough,” the lowest point in the cycle, had already been reached in U.S. house prices, and nine of the economists said a trough would be reached within less than six months. Another nine economists said house prices would hit bottom within 6-12 months; only one said prices wouldn’t hit bottom for 12 months or more.
House prices may have stabilized
This could be good news for home sellers and homeowners who’ve been concerned about declines in home values and buyers who’ve been beset by uncertainty about whether prices may fall further. Stable housing prices can benefit both buyers and sellers because stability creates more certainty on which major decisions may be based.
A recent rebound in home sales also supports the possibility that house prices may have bottomed out. Sales of existing homes surged more than 10 percent in October and could surge again in the spring and summer months of 2010, according to the National Association of Realtors.
Low house prices and low interest rates
Home buyers and homeowners who want to sell their home and buy another one are in an especially strong position due to the favorable combination of low house prices, very low interest rates and the federal home buyer tax credit, which has been extended and expanded.
Buyers can take advantage of low interest rates and low prices to buy a home and get a tax credit of as much as $8,000. The tax credit for homeowners who sell their home and buy another one can be as much as $6,500. Homeowners also can take advantage of low interest rate to refinance and lower their payment or lock in a low fixed interest rate.
Of course, not all the news is rosy. Many people are seeking employment or experiencing financial problems, and those pressures also could affect house prices in 2010. It’s also important to remember that all housing markets are local, so national trends in house prices might not reflect what’s happening in a specific city, town or neighborhood.
Home buyers and sellers and homeowners who want to refinance their mortgage should be aware of trends in the housing markets, but still make their own housing and mortgage decisions based on their personal financial situation and needs.