Home Prices are Still Overvalued

By Kyle Chezum Updated on 9/25/2013

Home prices are still overvalued at the present time according to Fitch Ratings, even with the crash of the real estate market of the recent years.  The prices could fall another 9.1%, despite nearing the bottom and the stability point.

Fitch Ratings said that home prices may fall further because of the small and marginal growth in the unemployment and GDP (Gross Domestic Product) data.  We all know that tight underwriting guidelines continue to be an impediment for new home buyers.  Moreover, the $25 billion government settlement with the country's biggest mortgage servicers is expected to keep the liquidation of distressed inventory going.  

New lending standards have impeded housing activity requiring borrowers to have equity in their properties for refinances or put down large down payments when getting new mortgage loans. A new bright spot in all of this is Obama's HARP 2 Mortgage Program which will help underwater homeowners get new mortgages with up to 125% LTV.

Some of the states in mid-America have more robust home prices.  These states are as follows:  Texas, Oklahoma, North Dakota, Nebraska, Kansas, and South Dakota.

Fitch also said that if GDP and employment continue their modest improvements, the housing market is sure to see stronger demands.