Home Prices Expected to Fall Even More

Home prices are down 20% nationwide since their peak in July 2006, according to the S&P/Case-Shiller home price index. Economist Nouriel Roubini of New York University, who accurately predicted the housing slide and credit crisis, expects another 20% decline in home prices in the next year. Patrick Newport of economic forecasting firm Global Insight projects a 15% drop.

The damage will likely hit even areas that have so far escaped many problems.

The action plan if you’re selling:

• Wait it out

In 2010, real estate should be stronger, with fewer homes clogging the market. So if you can wait until then to sell, do it.

• Make your place shine

In many markets, sellers will face the toughest competition not from fellow homeowners but from banks and builders. Both will be willing to cut prices dramatically to sell a foreclosed or new home.

To convince buyers that your house is worth paying up for, make sure that it’s in move-in condition (foreclosures almost certainly won’t be). Point out unusual qualities like wide-plank floors or stained glass that cookie-cutter new construction lacks.

• Price it below market

Find out how much nearby homes fetched recently. Once you’ve figured out what a buyer might pay, price your house 5% below that.

Sound painful? A recent study by a New Jersey appraiser found that houses priced below market ended up selling for more than similar houses listed above market. That’s because lower prices attract more buyers.

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