Housing market analysts expect a 20% drop in home values in 2012 that will trigger another fall in the economy.
This new failure will be caused by a mixture of continued foreclosures and a glut of homes that can not be sold.
Gary Shilling a major forecaster of the original housing market failure says we can expect the 2012 recession “no matter what action the Fed takes.” This is a rather interesting statement on top of criticism of previous actions taken by the Fed. With a Trillion dollars of our own debt purchased through treasury notes resulting in no improvement many point to the same mistakes made by Greece, Portugal and recently Ireland that have had their country bond ratings lowered to junk status.
With a 5 year inventory of 2.5 million homes housing prices are expected to fall an average of 20% with even higher discounts in the hardest hit markets this will mean an overall economic catastrophe.
Although it may be easy to say think that a 20% discount won’t effect your family especially if you plan to live in your home more then ten years the inability to sell both built and new homes means that everyone in the community is hurt.
Local taxes will need to be adjusted to cover the cost of basic services such as schools and development. At the same time that tax rates are increased local residents will demand that the appraised book value of their home on county tax records be reduced. This will cause a double rise in rates that will never come down even after the housing market returns to normal.
Hopefully this problem can be averted but if you believe you may be effected it is important that you take action now to prepare for what most people say could effect us all.