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What goes up must come down, and what we’re about to experience in the USA is the worst fallout because houses in the country are approximately double the historical average, and the aftershocks from the coming mega housing crash — when everything is finished — will put prices lower than ever seen in modern American history.

Indeed, most people think that the collapse will be inflationary, but it will not, as it will be deflationary. The only inflation will be for essential goods like food. Some might say that a house may be “essential” but there are plenty to choose from and you can always rent. Plus, housing is not perisshable like food or other commodities, so it will always be there until the fat lady sings. This might be why it would be a good recommendation to start renting a place instead of owning because those with mortgages will be facing a huge deflationary pressure on their wages, but the amount they owe will still stay the same regardless of their annual income. What a scenario!

Forget everything you’ve heard in the media recently that new home prices are bottoming. Contradictory data on house prices from Fiserv disagrees with those idealistic assessments and says that that the national median price of housing will decrease until July 2010. Financial information and analysis are also being projected to decline to a tune of of 11.3% in property prices by June 30, 2010. After this decline, Fiserv predicts house prices to stabilize and increased by 3.6% next year.

Take a look at housing prices in a histogram to compare how much housing prices have ascended and descended throughout the years.

Homes: About to get much cheaper
By Les Christie, CNNMoney.com staff writer
On 11:07 am EDT, Tuesday October 20, 2009

If you thought home prices were bottoming out, you may be wrong. They’re expected to head a lot lower.

Home values are predicted to drop in 342 out of 381 markets during the next year, according to a new forecast of real estate prices.

Overall, the national median home price is predicted to drop 11.3% by June 30, 2010, according to Fiserv, a financial information and analysis firm. For the following year, the firm anticipates some stabilization with prices rising 3.6%.

In the past, Fiserv anticipated the rapid decline in home-sale prices over the past few years — though it underestimated the scope.

Mark Zandi, chief economist with Moody’s Economy.com, agreed with Fiserv’s current assessments. “I think more price declines are coming because the foreclosure crisis is not over,” he said.

Prices had stabilized

The latest forecast is at odds with the past few months of the S&P/Case-Shiller Home Price index. That report has given hope that most housing markets may have already stabilized because the composite index of 20 cities rose in May, June and July. Nationally, it found that home prices have gained 3.6%.

Brad Hunter, chief economist for Metrostudy, which provides housing market information to the industry, however, expects a change in fortunes, however.

Home values in the nation’s second largest city, Los Angeles, have fallen 43.3% since June 2006 to a median of $313,000. They are expected to dive another 20.2% over by June 2010, and then start to climb in 2011. Chicago prices, which have fallen 25.2% to $227,000, will drop only 4.1% over the next 12 months and then starting to climb.

The Detroit metro area now has the dubious distinction of having the lowest home prices in the country. Prices have dropped 51.7% to a median of $50,000. They’re expected to fall another 9.1% and then stabilize/

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