House of cards: Home prices may be headed back down

house-of-cards-after-artificial-rise-home-prices-may-be-headed-down
house-of-cards-after-artificial-rise-home-prices-may-be-headed-down

Everyone heaved a sigh of relief as the latest S&P/Case Shiller U.S. National Home Price survey showed a price increase for the fifth straight month. Home prices may finally have hit bottom, but Dean Baker of the Center for Economic Policy is not so sure. In his weekly Housing Market Monitor, he says he thinks the boost may only be temporary, driven by the first-time homebuyers tax credit.

"Sales are clearly headed sharply lower in the months ahead," Baker warns in his Wednesday report. "The extension and expansion of the first-time buyers credit will have a positive impact, but it will not be sufficient to prevent a downturn." John Silvia, chief economist of Wells Fargo (WFC) agrees. He told the The New York Times that he forecasts a new decline in prices of as much as 10%.