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Will home values go up in 5 years?

Our home is under water by 100k.  We have a modified loan (Obama plan) at 2.25%, which will increase in 5 years. We will likely not be able to afford mortgage amount in 5years.  Most predictions I've read is that homes will continue to fall in value..It only makes sense to stay in our current loan if home values go up.  What do you think?

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January 02 2011 - Clayton
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Answers (5)

It really depends on the job market. If employment improves, then people will have more money to spend on buying houses. When they feel confident in that ability, there will be an increase in demand for homes. That will naturally drive home values up. This is all a big "if" though. Nobody can know exactly what will happen.
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January 05 2011
If you are in a $1M property you may gain $100k in 5 years. If you are in a $400k property I don't think you will gain $100k in 5 years.

I still would hang in there to find out. Whatever your payment is at 2.25% I think it would be difficult to find an equal home to rent for the same amount, don't you?

Happy funding, Rudi
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January 02 2011

We are in unchartered waters right now. I don't think it is a matter of "if" the values will go up, but a matter of "when" values will go up. Right now it's all about employment. When the jobs are back the pressures of supply and demand will start to take hold and people will want to start buying homes again. Most people that lost a home in this recession will want to own a home again.Their credit should recover after seven years, which is the amount of time it takes to get a foreclosure off your credit report. So the foreclosures started in 2007, so in 2014 we should see more qualified buyers start to enter the market place. Who knows where it will be by 2016. All I know is America wants to get back to work, so I'm a believer it will all turn around.

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January 02 2011
I shook the magic 8 ball and  "All Signs Point To Yes" came up, all is good now! I hope it is right.
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January 02 2011
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2016 is a long way out. There are a lot of unknowns that could happen in that time.

Will cali ever fix their financial problems?
Will they do something to increase taxes so much on everything that people can not afford to buy a house?
Will the economy recover or not?

If your state increases taxes dramatically on everything but real estate (thanks to prop 13) people may lack enough income to spend much money on houses.

Will the federal government increase income taxes? Will the federal government allow the economy to recover?
Will the federal reserve print so much money that it makes our existing money worth much less? Will interest rates go up a lot? Will bond buyers keep buying treasuries?

In 5 years could your income go up enough to cover any added costs you might have?

It is possible in 5 years that prices could increase. There is a perfect scenario that would allow it to happen. I simply can not see it happening in this reality.

S&P revises shadow inventory timeline upward, again

The link below has several charts you may find of interest.
http://www.doctorhousingbubble.com/who-will-buy-the-homes-of-tomorrow-2010-highest-average-monthly-foreclosure-filings-on-record/

I seriously doubt in most areas that prices will stabilize any time soon. Everything the government is doing now is actually slowing down the decline of housing prices. By refusing to allow prices to normalize quickly (drop fast) they are making it take years longer than it really should. That could mean like Japan we see a decade of dropping prices.
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January 02 2011
 
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