Bloomberg reported this week that U.S. home prices fell even more than forecast for the one-year period October 2010 to October 2011.
According to the Bloomberg report, the median prediction of 27 economists surveyed last year was for home prices to fall by 3.2% over 2011. But the figures now in show that home prices actually fell by 3.4% (according to the S&P/Case-Shiller index of property values in 20 U.S. cities).
That difference may not seem much - but the damage here in Seattle is much worse. As reported by the Puget Sound Business Journal, home prices in Seattle have fallen by 6.2% from a year ago - a drop that is nearly twice the national average. Home prices in Seattle fell by 1% between September and October alone, and by 1.1% the previous month.
The one good side to the drop in home values is that it may turn renters into potential home buyers - bringing new players into the real estate market. As homes become more affordable, some renters may choose to take advantage of the twin opportunities: low home prices and low mortgage rates, and enter the housing market.
There is still a lot of inventory available at present, and it may take time before an increase in buyers is reflected by actual rising home prices - but more buyers is a necessary early step towards any eventual recovery in the real estate market.
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