Why Are Home Prices Headed Lower?

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Home prices are expected to drop even lower this year. They expect drops of 3% or more.

There are three reasons they feel that this is going to happen this year.

1. Foreclosures- They expect a good many more foreclosures to come because of slow government help. They say the worst hit markets will be the ones who have already suffered high foreclosures such as Arizonia, California, Nevada and Florida.

2. Interest Rates- The rising interest rates will be another slap to housing prices. They believe that the rates for a 30-year mortgage will reach 6% as the government slows down their economic support.

3. Tax Credit- The tax credit did wonderful things for the housing market but it ends in April.

Lots of things factor in what the cost of a home is. Hopefully they are wrong in their expectations.