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Contradictory Findings Make For An Unpredictable Housing Market

Aug 6, 2008
All through the later part of 2007 and the first part of 2008 consumer confidence began falling. The good news is that currently the reports of consumer confidence falling has ceased. The bad news is the falling home prices have not ceased. Today there were two separate reports released that were rather conflicting. One reports that economists point to an encouraging stabilization in consumer attitudes and the other reported on a continued erosion of the value of homes. This poses two entirely different views and understandings of the economy today creating unpredictable effects in the housing market.

Standard & Poor's/Case Shiller's monthly report states that the median price of a home fell a whopping 15.8 percent in 20 of the biggest metropolitan areas in May. This is right on the heels of a nearly equally steep drop in the prior month. Also reported by the national Association of Realtors; existing home sales for June declined 2.6 percent in May and 15.5 percent since June of 2007. Despite these reports, we are led to believe that consumer confidence is stabilizing.

In all of the 20 metropolitan areas that were surveyed, home prices were down in the month of May. Not surprisingly, the falling home prices match an increase in the nations foreclosure activity adding the over abundance of housing that is not moving on the market. This is making the prices of the homes go down. This would be great for those looking to buy homes; particularly first time home buyers, if the economy were not in a state that prevents people from purchasing new homes. Fortunate for some first time homebuyer, there are programs that are being created and others that are still in place to assist them in buying first homes. The first time home buyer may be the only ones celebrating, homeowners who must sell a home before purchasing a new home are not as happy.

Ordinarily home prices going down are celebrated by people wishing to purchase a home; right now it is still spelling trouble for the economy as a whole. The decline of home value means a decline in equity. Homeowners who purchased their home recently might now find themselves "underwater", or owing more on the home than what the house is worth.

Over the last ten years the United States experienced a real estate boom where consumers could tap into the equity in their homes to pay for home improvements, education and other large dollar items which all served to fuel the consumer economy. Today with equity falling these loans are not being taken out and the fuel to the economy has lost its spark. But, by report consumer confidence has held for this month but according to the conference Board it raised less than a point in July. Never-the-less this slight raise was the first increase since December.
About the Author
J Stromsteen has many years expertise in the finance, real estate, and insurance industry. She contributes to various websites such as First Time Home Buyer where you can find today's mortgage rates as well as a wealth of information on getting a First Time Home Buyers Loan .
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