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Turning the Tide in Title

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Th e M Rep o RT | 53 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t ANALYTICS the latest economists Forecast moderating Home Price gains home prices and home sales are on the (slight) up-and-up. A s home price increases keep showing signs of slowing down, economists expect the trend through the next two years, according to a poll conducted by Reuters. In a survey of 31 economists, Reuters arrived at a median forecast of price growth of 7.5 percent this year, down significantly from the 13.4 percent im- provement recorded in the S&P/Case- Shiller 20-city index last December. Price growth is expected to slow beyond that, dropping to 4.0 percent by 2016. The survey also found that, despite concerns from some analysts of 'over- heating' as price gains far outpace the historical average, the median judgment of the surveyed economists is that the housing market is poised evenly between extremely overvalued and extremely undervalued. Meanwhile, even as price increases begin to slow, analysts don't expect any major pickup in housing activ- ity as lending standards, slow job growth, and stagnant wages prevent potential homeowners from entering the market. According to Reuters, existing- home sales are forecast to reach an annualized rate of 4.75 million this quarter, continuing to march upward to a rate of 5.10 million by the first quarter of 2015. Existing-home sales achieved a rate of 4.65 million in April, accord- ing to the National Association of Realtors, a modest improvement fol- lowing a slow start earlier this year. One in Five says a Home is 'not Worth risk' people want homes, but don't want bad investments. i n a poll released at the start of this month, nearly one in five Americans say they don't think owning a home is worth the risk in today's un- certain economy. The poll, conducted by the National Foundation for Credit Counseling (NFCC), shows 18 percent of respondents are not willing to assume the risks and obligations associated with tak- ing out a mortgage loan. The NFCC says the findings are consistent with the Census Bureau's latest household data, which show a national home- ownership rate of 64.8 percent in the first quarter—a 19-year low. "The housing crisis, recession, and continued economic instabil- ity appear to have shaken the confidence of many Americans, particularly when it comes to big-ticket items such as a house," said NFCC spokesperson, Gail Cunningham. Indeed, while Americans have been generally optimistic about housing, banks are reporting weakening demand for loans, owing in part to tighter lending criteria and consumers' doubts as to whether they can qualify. This comes in spite of 82 percent in the NFCC's survey insisting that "owning a home remains a critical part of wealth building." Cunningham noted that "the unwillingness to take on a mortgage loan may be a smart decision for some, as many bor- rowers have learned the hard way that homeownership does not come with a guarantee of continually increasing equity." With so many Americans still listing homeownership as a future goal, the NFCC suggests most would be better off rent- ing until they're fully prepared to take on all of the associated responsibilities, including paying a mortgage, home and lawn maintenance, and taxes and insurance. "Homeownership is about much more than buying a home," said the group in a released statement. "Renting until they are in a position to buy can help a person avoid a costly mistake, including the negative ramifications of foreclosure."

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