The experts I hear on the business news channels expect another 10-15% decline in home prices over the next 12 months. This discourages people from buying because they think, why should I buy now when I can get a similar home more cheaply in a year?
The rate of foreclosures is rising, putting more downward pressure on home prices and leading to ever more foreclosures.
“Interest rates help at the margins but they’re not game changers,” Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, said in an interview on Bloomberg Television yesterday. “The problem is people’s access to credit is very limited. Even if the low interest rates are there, you maybe can’t take advantage of it.”
Applications to purchase homes fell 4.7 percent in the week ended Sept. 16 to the lowest level since February, according to an index from the Mortgage Bankers Association in Washington. The group’s gauge of refinancing jumped 2.2 percent.