Listening to this Channel 7 ABC report they list 4 reasons home prices may drop - clearly not good with math since it's a "triple whammy" headline.
1. Shadow Inventory - California 80,000 homes, and 5 million nationally over the next 2 years according to two studies released yesterday. Both from currently banked owned that haven't hit the market, and those delayed in becoming foreclosures because the owners are trying to get loan modifications right now.
2. Rising interest rates when the government stops buying mortgage backed securities
3. Home buyer tax credit expiring
4. Jobs - I guess this wasn't a "whammy" in this report, but as one interviewee says, it could be the only item that really matters.
The caveat here - right now there is a lack of inventory and high demand. We're hearing a LOT of multiple offer stories, and the above ABC report quotes offers going 5% to 10% over the asking price on the Peninsula. I have several very frustrated buyers here in the City because they can't find what they're looking for. So... Sellers... IF you believe the above report, now is the time to sell.