US property prices to drop significantly in 2008
Merrill Lynch reports that home prices will fall in 2008 by 15 per cent or more. It's likely to continue into 2009 and 2010 as well.
According to Merrill Lynch, an investment bank based on the US, housing prices will fall significantly through 2008, 2008 and perhaps 2010 as well. They are predicting a drop by 15 per cent for 2008, which would fuel large economic problems for the already weak US housing market.
The bank says prices will drop further in 2009 and by 10 percent.
These figures are in stark contrast to the recent reports issued by the National Association of Realtors, NAR, who monitors the housing industry throughout the US. Their estimations are that housing prices would remain relatively flat throughout 2008. The NAR did make some changes to this forecast lowering their year over year first quarter numbers to reflect a 5.3 per cent drop.
The NAR also predicts that prices will begin to rise by the end of 2008.
The National Association of Realtors is expected to release key information about December sales by 10 am eastern standard time Thursday. Those numbers are expected to reflect a 1 per cent drop which is seasonally adjusted.
Information here is mixed due to the difficulties that lenders are facing in providing mortgages. Many lenders have stopped providing loans to under-qualified applicants or those that can not be insured by programs like Fannie Mae and Freddie Mac.
Merrill Lynch believes that housing prices have become overinflated to the tune of some 30 per cent. In comparison to other measures such as rents and GDP, they believe a 20 to 30 per cent decline is the only way that this imbalance will rectify itself.