Another quote: The bottom isn't behind us

In some areas prices have probably already hit bottom – like some non-bubble areas, and some bubble areas with significant foreclosure activity.

But I think many areas, especially the mid-to-high priced bubble areas, there will be further price declines. I’m not as certain as I was in 2005, but I think these price declines will drag down the Case-Shiller indexes – and I don’t think the price bottom is in.

I do not have a crystal ball, but …

It seems there are many more foreclosures coming. Some of this depends on the success of the modification programs, but the Q2 MBA delinquency report shows a growing number of homeowners in the problem pipeline.

And the Fitch report yesterday suggests few of these delinquent homeowners will cure.

That seems to mean rising foreclosures, and more distressed inventory. The MBA Chief Economist Jay Brinkmann thinks foreclosures will peak at the end of 2010.

Historically prices bottom about the same time as foreclosure activity peaks. Maybe it will be different this time – maybe the modification programs will significantly reduce foreclosures – maybe prices will bottom before foreclosures peak … but I’ll go with the normal pattern.

Calculated Risk, tempering excitement over June’s Case-Shiller numbers, which showed slight gains in home value locally and nationwide. Other factors that could lead to lower values down the line: waning demand from first-time buyers once they use their $8,000 federal tax credits, a lack of “move-up” buyers looking for mid- to high-priced homes, and forecasts calling for a rise in unemployment in 2010.

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