If prices declines, which will probably happen is mortgage rates raise, then might trigger more foreclosures as additional home owners walk away from their homes.
Mounting foreclosures pushed the median price for a U.S. existing home to $158,800 in January, the lowest level since 2002, according to the National Association of Realtors. At the same time, sales climbed 22 percent from October, the biggest three-month gain since the end of a homebuyer tax credit. The rally began as mortgage rates started to rise from record lows in November and the economic expansion picked up speed.
“The job market is beginning to gain traction, consumer confidence is improving, and even though mortgage rates have increased, they’re near historic lows,” said Mark Zandi, chief economist of Moody’s Analytics Inc. in West Chester, Pennsylvania. “Prices may go down a bit more, but we’re still seeing a pop in sales.”
Unemployment, incomes, higher rates, changes in mortgage tax deductions, and higher down payment requirements are putting pressure on housing prices. Oh, not let's forget oil prices that increase the cost of living.
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