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US Home Prices Predicted To Climb

By Allison Halliday | July 4, 2011

According to the Housing and Urban Development Secretary, Shaun Donovan, home prices in the US could begin to rise as soon as the third quarter.

Home prices could be about to rise

Home prices could be about to rise, says Shaun Donovan. Image courtesy of Knowledge Instead

Donovan was speaking on CNN’s ‘State of the Union’ program at the weekend, and said “It’s very unlikely that we will see a significant further decline. The real question is when will we start to see sustainable increases? Some think it will be as early as the end of this summer or this fall.”

Property sales have increased in six out of the last nine months, and the number of homeowners whose mortgages are in default is declining, and the general opinion is that prices will start to rise as the number of foreclosures drops.  It’s a great time to buy with prices being at their most affordable for generations.

The number of contracts signed to purchase previously homes rose by 8.2% in May, according to figures released by the National Association of Realtors on June 29th. Around 1.7 million US homes undergoing foreclosure proceedings were expected to be on the market in April, which is 18% less than peak figures.

Home prices

Home prices will go up once foreclosures are out of the way, say experts. Image courtesy of Big Goss

The shadow inventory of unsold foreclosure homes now has a five month supply at the current rate of sales, according to CoreLogic Inc., and this inventory provides a useful indication of the state of the market, as foreclosure homes drag down the prices of normal homes and discourage buyers.

However the concern still remains that many would be homeowners are finding it difficult to get finance due to tighter lending conditions. Donovan  feels that homeowners should be encouraged to have realistic expectations about buying property, and should regard it as a good investment that will make money over time.

Allison Halliday is a Realty Biz News contributing writer. She handles International Real Estate and is a seasoned blogger.
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