The run-up in housing prices that began earlier this year may soon be a thing of the past, says Wellesley College economist Karl Case.
The Standard & Poor’s/Case-Shiller home price index for 20 major cities, which he co-founded, rose 0.4 percent in October from September.
That represented the fifth straight month of rising prices, but the rate of increase has plummeted.
And prices were unchanged or fell in nine cities.
“I’m worried. Everyone’s worried,” Case told The New York Times.
“If prices sink 15 percent from here, which is a possibility, and the 2008 and 2009 loans go bad, then we’re back where we were before — in a nightmare.”
The tax credit for home purchases is losing its punch, and interest rates are rising. That’s putting a damper on housing demand.
“The probability is very high of a serious double dip like 1982,” Case said.
Fannie Mae, Freddie Mac and the Federal Housing Administration, key supporters of the housing rebound, are tightening their lending policies.
“All this is adding to the downward pressure on prices,” Faramarz Moeen-Ziai of Bank of Commerce Mortgage in San Ramon, Calif. told The Times.
Others also are pessimistic about housing.
"We're not seeing a great deal of recovery in home prices," Mark Vitner, senior economist at Wells Fargo, told The Washington Post. "What may happen is that prices will plow along the bottom for a year or two."
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