FinanceBlog

Looking Grim for Home Owners

Over the past year housing prices have been dropped down to 4.2 percent of their original price. This comes after the shock of inappropriate lending by banks. However in the coming year there does not seem to be an end in site. Joshua Shapiro, a chief U.S economist says that “the worst is yet to come.” It is estimated that in the next year housing prices will fall all the way to 5.7 percent, making it the worst real estate year in the last 40 years. Currently in the United States there are over 2 million homes for sale.

The current problem stems form the fact that there is too much supply for new homes but not enough demand. In 2007 almost 4 million new homes were built on top of almost 250.000 that had foreclosed. This is projected to rise to 1 million in the next couple years.

However, some places will be affected more than others. Cities such as Cleveland and Detroit that did not going through a housing boom will be less affected than other cities such as Miami and Las Vegas, which have undergone a large housing and development boom.

The housing market isn’t expected to recover until late 2009, and even then, experts predict it will be years before the market is back to the state it was before 2007.