Will Mortgage Rates and Home Prices Continue to Decline in Tucson?

November 2, 2009

Question from the blog today – will rates and home prices keep going down?

Answer – depends on what time period you look at.

Let’s start with home prices. Will they continue to go down over the next month? Most certainly. Over the next year? It’s likely. Over the next 5 years? Maybe not. Over such a long term, there’s no way to accurately predict.

If you look at the average sales price for homes in Tucson over the last few years, you can see the decline. I’d argue that the drop in home prices is slowing a bit, but there are several factors in play that could make that change – the availability of financing, the levels of inventory, the economy as a whole impacting salaries and the ability to buy and sell a home.

If we look at mortgage rates, there’s some seasonality there too. I talked about that earlier in this post about rates going up or down. History says rates go down in the fall. But again, there are larger factors at play.

AND – rates are changing rather quickly, as Dan points out in this article about how long a rate quote lasts over the past 2 months. Lenders are changing their pricing often, which changes your rate often.

So why ask if rates and prices will continue to decline? Trying to time the market, buy at the best possible price and rate? I guess you can try. But you’ll never know if we’re really at bottom until we’ve already left it. It’s all just part of the risk you take by deciding to buy or sell at any particular time.