Randomn3ss » Home prices to drop for first time in 40 years

This article was written by Mike Panic and is about: Home, Money

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As a somewhat new homeowner (bought 15 months ago), I�ve been hearing about this decline since a full year before I was even shopping. Everyone seems to talk about the real estate bubble bursting. In my neighborhood, houses still sell in less then 10-business days and go for asking price or slightly above asking price and have appreciated close to 25% since my purchase. Mortgage rates have pretty much leveled out, so now the buyers don�t feel as rushed to get the house they want in fear that the rates will be raise overnight. I�m still not sure what is causing the big fear of a bubble, I can see it maybe leveling out but not totally declining.

The National Association of Realtors said Wednesday it expects its measure of home prices to fall this year for the first time since the group began keeping track nearly 40 years ago.

In its latest monthly forecast, the real estate group said it expects a 0.7 percent decline in the median price of an existing home sold in 2007. A month ago it had been projecting a 1.2 percent increase. Half of all homes sell for more than the median and half for less.

So what does this tell us? My thoughts, the median house price is often higher then what most people living in that area could afford to pay anyway. Job relocation and urban sprawl will continue to contribute to the rising price in small town USA, driving those who grew up there out without many places to go.

Source: CNN Money