banktime.com

The government’s interventions into the troubled national housing market have done a lot of really great things for home buyers, but they have also had one alarming side effect. A Goldman Sachs report released last week found that homes are costing five percent more than they would be otherwise. Modifying mortgage terms for those on the brink of foreclosure and juicy incentives for first-time home buyers have both kept the moribund industry afloat, but these changes have not been without effect on the consumers of the United States. Home prices are going up slowly, and there are some indications that the days of rock-bottom prices may be behind us. It’s not uncommon to hear about bidding wars on bank-owned homes as investors virtually beat one another down to get the first shot at these desirable properties.

But don’t let the decrease in available properties fool you. It’s not that there are less houses on the market right now because people are snapping them up, it’s because the loan modification structure at present has just drawn out the process of foreclosures for very long periods of time. Some experts believe that many of the same homeowners requesting loan mods to stave off foreclosure this year will have the wolf back at the door within twelve months. This means that the problem has just been prolonged, not solved. Meanwhile, Americans will face higher home prices for the near future, even as values are expected to continue dropping anywhere from five to ten percent over the next year.