Don't Expect Much Home Appreciation

Don't Expect Much Home Appreciation

Don't Expect Much Home Appreciation

You may experience a couple of full moons before you see home prices rising again in the US. Factors, such as a large number of available homes, the continuous increase in foreclosure, unemployment and bank problems and issues continue to dampen the housing market across most regions in the country.

If you perceive that you can earn by selling your home or by getting a mortgage loan based on the most recent home appreciation, then you may have to wait a few more years.

A lot of factors continue to weigh down on the housing market in the country. The worst among these evils is unemployment. Home prices and sales are of course directly connected to how many people are employed. With an unemployment rate of 10 percent, home sales will not benefit so much.

No one is eager to buy homes. According to a report conducted by Ned Davis Research, prices of houses may not start to increase until the unemployment rate goes down to 7 percent or less.

Once the unemployment rate reaches around 6 percent, Ned David Research perceives that house prices may rise to a rough 2 percent per year, or simply pattern from the level of inflation based on history.

The report author Joseph Kalish says that even though there is certainly a rise in the housing market, it will take at least two years for us to get there.

A complication in any housing rebound situation is that there are a lot of homes that are still unsold, and more are being foreclosed.

Kalish says that this surplus is between 1.4 to 2.5 million homes. And even with mortgage rates that are the lowest in history, the slack economy will not be able to support a good buying and selling market. Homebuilding takes a punch as well, since it also takes a halt.

The wave of foreclosure is more likely worse that what the big banks admit. Financial analyst for the Institutional Risk Analytics Christopher Whalen told the American Enterprise Institute that the inability of borrowers and the foreclosure surplus both create the situation for the demise of a lot of large banks in 2011.

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