Are home Values Dropping?

(Disclaimer:This is not legal advice,it is for informational purposes only)

If you look at the chart below you can see the trend lines for housing values from 1970 thru 2011 and what has happened with the housing bubble. If you follow the trend lines forward it would appear that we are near or at the bottom for home values and that things are going to continue forward normally. Not so fast…..

There are numerous variables at work here and its anyone’s guess about the future. A few things to consider are :

1. How the mass number of upside-down properties (11,000,000 nationally) are going to be dealt with – Foreclosure, Short Sale etc.
2. Future Interest Rates.
3. Home buyers income and buying capacity.(Middle Class Income Squeeze)
4. Accessibility of loans from lenders and the Feds/FHA/FannieMae/FreddieMac
5. FICO and income criteria for loan qualifying in the future.

In my opinion if you just assume that the bubble will deflate and we will be back on line to home value norms it may be incorrect. A reciprocal deflation of values may be the outcome as many more foreclosures and short sales are released into each neighborhood dropping values further. In my napkin estimation, values will drop to the 2000-2002 values which would be another 10-20% drop in values from today. Dec 2011.

If you look at the previous three “waves” of up and down trends in values high points in 1973,1978 and 1989 you see a trough to that peak approximately three – five years out from the peak. The current peak deflation curve is much bigger with a bottom not coming possibly till 2015 and full recovery (back on the trend line) not until 2019. So if you are planning your future you are looking at not building equity in your home for another possibly 8 to 10 years. Obviously this is prognosticating based on previous trend lines and things can be quite different as there are many variables.

GA LAW GROUP can review your options for Loan Modification, Lien Strips and Short Sales.