Tuesday, July 7, 2009

Will Prices Go Down More?

Many media and industry experts are saying that the total price drop on the average home in this economic decline will total 35 to 40%. If that's true, there's another big drop to come. I think the wild card is the effect of the stimulus plan. No economic indicators from the past can be entirely accurate when compared to what we are seeing now. Although, IMHO, there is a great deal to criticize about the way in which the government has gone about randomly helping some people and not others, the result is that activity has been propped up through a combination of relief, tax credits, and a moratorium earlier in the year on foreclosures. It's anyone's guess as to what would have happened to the real estate market had those things not occurred, and it's equally unclear what would have happened had the program been rolled out differently, but it IS clear that billions of dollars have been dumped into the economy. No programs from the past have been as sweeping.

Will everything that has been done keep prices from falling as they would have? It's almost like having a shelf over the side of a cliff, where someone who falls off can land, and keep from tumbling further. Here's hoping that the cliff is big enough and sturdy enough for us all to huddle in safety!