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Home Prices Will Fall Through Next June, Minimum

Written by Gary North on December 6, 2012

Over half of American homes will drop in price between now and next June. That is the conclusion of an article on CNN.

This has to do with the fiscal cliff, we are told. The fiscal cliff will produce a recession.

The question is this: Why won’t we get a recession anyway? The signs are there.

Home prices fall from winter through June in most years. Sellers who must sell are forced to lower their prices. This is irrespective of the fiscal cliff.

Home inventories remain high. Banks refuse to foreclose. Owners stop paying and live rent-free. They can build capital for their next home purchase.

Congress may revoke the interest deduction on mortgages. This will hit the rich harder than it will hit the middle class.

But maybe not. That deduction is a sacred cow. Will House Republicans accept it? They have mortgages.

Fiserv’s estimates assume that about half of the fiscal cliff tax hikes and spending cuts will occur, said Stiff. The forecast does not take into account any change to the mortgage interest deduction. Should that deduction expire, Stiff said home prices might be even weaker over the short-term.

It’s time to start shopping for investment houses. I am. I recommend it.

Continue Reading on money.cnn.com

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7 thoughts on “Home Prices Will Fall Through Next June, Minimum

  1. The deduction for home mortgage interest is a sham. It goes on your Schedule A. Long story short the last number in the lower right corner of schedule A must EXCEED the Standard Deduction (and I think the Personal Exemption combined) in order to ITEMIZE DEDUCTIONS on your income tax. If it does not then you cannot itemize.

    Every year both the Std Deduction and P.E. go up automatically thus effectively denying people the ability to use the home mortgage interest deduction. So without ever having to take political heat and taxpayer anger at outright eliminating it they just simply phase it out via the Schedule A.

    If you can itemize then the only thing you really get is the amount OVER the Std. Deduction cause you get the Std. Deduction by default.

    Slick of Congress. Most Americans haven't even figured that one out. They should.

  2. Home prices do not fall from winter to June. Asking prices fall from winter to summer. To determine if home prices actually fell in a given year it would be necessary to compare that year's sales data with the previous year's sales data. And while it is true that you are more likely to find a bargain at the end of the selling season the more desirable properties will have already been purchased.

    Will the rich really be hit harder by congress revoking the mortgage deduction? The rich may lose a larger deduction than the middle class but will they actually feel it more than a middle class family on a tight budget? I don't think so.

  3. Auric Solomon says:

    You are wrong. Your premise is flawed. Your argument assumes the summer rise over the winter's prices are not subject to year over year value changes. There is ample year over year data clearly showing year over year price drops since the housing peak in 2007. You reason like a Realtor. Realtors have no business giving economic advice.

  4. You’re kind of an idiot. I get to use my itemized deductions every year, so no, it is not a sham.

  5. Gary North isn’t a realtor or an economist, though he likes to pretend he is.

  6. That won't be good news for obamacare as their new tax on the sale of houses kicks in in January. Guess they'll have to come up with a new tax to fill the gap. When people get wind of the tax and it is a seller's tax they may not want to sell unless they absolutely have to since it will cut into the profits they would have to use to buy another house.

  7. Only idiots pay income taxes on labor because it is unconstitutional & nowhere in the US Tax Code is anything that specifies you have to…