Home Prices Continue to Fall

The housing market has seen better days. After much debate, it seems as if we are finally in agreement on this fact.

But the one thing that analysts, economists, industry insiders and regular homeowners are not in agreement on is whether the market will get better or if we are headed for some more rough patches before things get better again.

Well, the current numbers that are coming in right now are making this fairly difficult to determine.

Its mixed reviews and numbers all throughout the nation’s housing market. In the most recent report, we find that home prices are sliding yet sales numbers are decreasing, a predictable catch-22.

Home prices have to fall in order to attract buyers into the market, and these home prices declining only leads to a further declining market.

Basically it’s a no-win situation until we start to see everything look up, and no one knows when that will be. A February 27, 2007 article by Chris Isidore of CNNMoney.com, “Home price slump continues,” discusses some recent data that has come in about our housing market. “Housing prices continued to fall in the latest reading on the battered real estate market released Tuesday from an industry trade group. The median price of an existing home sold in January was down 3.1 percent from a year earlier, according to the National Association of Realtors.”

The reason why these price drops are so concerning and headline warranting is because this is very unusual for our housing market. Normally it is robust and flourishing; but everyone knows that what goes up must come down. “It marked the sixth straight month that prices have shown that year-over-year drop, a relatively rare condition for home prices before the current slide. Before the Realtor's price readings showed a year-over-year drop for August sales, it had gone more than 11 years without that kind of drop.”

But in another sign that things aren’t so bad, these lower prices are bringing more buyers to the desolate housing scene, thus stimulating the market and causing home sales to rise. “The lower prices apparently are helping to draw more buyers to the market. The pace of home sales rose 3 percent from December, coming in at an annual rate of 6.46 million homes. But that was also down 4.3 percent from year-earlier levels.”

“It's just like any market, when there's price depreciation, buyers are more likely to come into the market place,’ said Wachovia economist Phillip Neuhart. ‘I think prices will be flat to slightly negative this year. I don't think we're going to see any imminent recovery.”