Although consumer confidence is growing the property market still faces a long road to recovery with prices down 3.4% in October 2011 compared to October 2010 according to the latest Standard & Poor's Case Shiller home price index.
During the spring and summer prices were showing signs of stabilising or even increasing, so these recent figures are a bit of a blow. Experts think they probably result from increased foreclosures, as during the summer months foreclosures slowed due to concerns over paperwork. Mortgage companies have now resumed their foreclosure activity which is forcing prices downwards.
Those buyers who can afford to wait are still choosing to sit on the fence, especially with expectations that prices may still fall a little further. A recent survey by Zillow showed that most housing experts believe prices will continue drifting downwards until the end of the year at least, due to several different factors.
One of these is the problem of negative equity as it is estimated around 22% of homeowners now have mortgages which are greater than the worth of their homes and they are unlikely to be able to afford to move and buy another property.
Foreclosures are still a problem and 6 million homeowners were late with their mortgage payments or were already facing foreclosure by the end of the third quarter. Continued distressed sales can only force prices downwards.
One of the worst performing metropolitan areas remains Atlanta where prices declined by almost 12% year-on-year with foreclosures accounting for much of this loss. Out of 20 cities just two were able to report positive gains with Washington and Detroit showing gains of 1.3% and 2.5% respectively.
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