Home Values Will Keep Falling In 2011

by Christopher Maag

Home prices fell 4.1% in 2010, and the drop in 2011 could be nearly as steep, according to a forecast published recently by Clear Capital, a research firm serving the mortgage industry.

Prices will fall by another 3.7% this year, the company believes.

The annual figures conceal a lot of volatility. Home prices actually increased 9.7% over a 21-week period between late March to mid August 2010, Clear Capital found, followed almost immediately by a 9.4% drop for 19 weeks from September through December.

Expiring federal tax credits and a mini-boom in the sale of foreclosed houses accounted for much of the contradictory trends.

“In terms of home prices, this past year has certainly been characterised by uncertainty,” Alex Villacorta, senior statistician for Clear Capital, said in a press release. “Tax incentives and high levels of distressed sale activity had counter effects on home prices which contributed to the fragility of the markets.”

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