House Prices – Up Or Down In 2011?

"Will house prices recover in 2011?

Unfortunately, every indication seems to point to even more declines in U.S. home prices. The following are five key factors that will continue to drive house prices down....

#1 Mortgage Rates Are Going Up

Over the past couple of months, mortgage rates in the United States have been moving up fairly steadily. That is going to make mortgages even more expensive for potential home buyers.

#2 Mortgage Delinquencies Are Increasing Again

As we approached the end of 2010, the number of mortgages in the U.S. that are "seriously delinquent" started to creep up once again. That means that we are likely to see another bump in foreclosures at some point in 2011. There are already way, way too many homes on the market, so more foreclosures will only add even more supply to a market that already has way too many homes for sale.

#3 Mortgage Lenders Have Really Tightened Standards

Most large financial institutions have responded to the mistakes of the past decade by really, really tightening mortgage standards. It is now much harder to get a home loan in the United States. But if less people can qualify for a mortgage that means that less people will be out there buying homes.

#4 The Entire Mortgage Industry Continues To Be Mired In Legal Problems

Foreclosuregate is a huge story that simply refuses to go away. For example, just the other day the highest court in Massachusetts voided the seizure of two homes after the big banks involved failed to prove that they actually held the mortgages at the time they foreclosed. This case made headlines all over the nation, and precedents such as this will encourage even more homeowners to challenge their foreclosures in court. This is going to be really bad for the big mortgage lenders and it is going to really slow down the pace of mortgage lending.

#5 The Underlying Economy Continues To Be Very Poor

The American people cannot afford to buy good homes if they do not have good jobs. But today there are seven million fewer middle class jobs than there were about ten years ago. As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer. Today, there are over 6 million Americans that have been unemployed for half a year or longer. Until there is a "jobs recovery" there simply is not going to be a "housing recovery"...

...So it looks like the U.S. housing crash is going to continue for a while."

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