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This pattern of price declines is explained by the end of the first-time buyers tax credit. In all of these cities, prices of homes in the bottom tier had risen more rapidly than the prices of other homes through the fall. However, this gap has been reversed since the end of the initial tax credit. The change in house prices over the last year in each city is close to even across tiers, as the declines since the expiration of the credit have offset the more rapid increases last summer and fall.
The expiration of the extended credit at the end of this month is likely to add downward momentum to house prices. This will be amplified by the rise in interest rates resulting from the end of the Fed's purchases of mortgage-backed securities and the smaller role for the FHA. As a result, price declines will almost certainly accelerate this summer.
Dean Baker co-director of the Center for Economic and Policy Research (CEPR). http://www.cepr.net/index.php?option...e=11&Itemid=22
The expiration of the extended credit at the end of this month is likely to add downward momentum to house prices. This will be amplified by the rise in interest rates resulting from the end of the Fed's purchases of mortgage-backed securities and the smaller role for the FHA. As a result, price declines will almost certainly accelerate this summer.
Dean Baker co-director of the Center for Economic and Policy Research (CEPR). http://www.cepr.net/index.php?option...e=11&Itemid=22