Double-Digit Home Price Drops Not Out of the Question

Double-Digit Home Price Drops Not Out of the Question

 

Over the next few years, more than three-quarters of the nation's housing markets will suffer some decline in home prices.  Many will experience double-digit hits in a forecast that has worsened considerably in recent months.

 

According to an analysis conducted by Moody's Economy.com, declines will exceed 10 percent in 86 of the 379 largest housing markets.  And 290 of the cities will experience price drops of 1 percent or more.

 

The survey attempted to identify the high and low points of housing prices in each of the markets, some of which started declining from their peak in the third quarter of 2005.  All are median prices for single-family houses.

 

Nationally, Moody's is projecting an average price decline of 7.7 percent.  That's a jump from the 6.6 percent total price drop that the company was forecasting in June and more than twice that of last October's forecast of a 3.6 percent price decrease.

 

So if you're thinking of buying a home, does this mean it's smarter to wait until prices drop further?

 

Our opinion is, NO!  An increase of only 1 percent in the mortgage rate can more than offset any savings you might realize by waiting.  In the case of "gambling on interest rates".. waiting for home prices to drop could end up costing you more than you'd save.