Home prices fall again: Eight keys to the housing market future

Five years after home prices peaked in the US, the housing market remains a weak link in the economy – an important sector that's still struggling to find its postrecession footing. What will 2011 bring? It could be a pivotal year when home prices bottom out and a more stable environment begins to emerge. Here is a look at the key issues affecting home buyers and sellers as we approach the spring real estate market.

7. If I am a prospective buyer what should I be watching most closely?

Ben Margot/AP/File
This home was on sale in Alameda, Calif. in 2010. Experts advise prospective home buyers to watch for rising mortgage rates, which signals declining purchasing power for the borrower.

Keep an eye on mortgage rates. When they're ticking up, a borrower's purchasing power is headed down.

Weigh the option of buying a distressed property carefully. A bank-owned home or "short sale" property (in which the seller's bank agrees to take a loss) can be a bargain. But getting it can be a long and potentially frustrating process, housing experts say. Self-education and persistence is needed to see it through. Deals can fall apart at the last minute. And the home may need more than the usual share of fix-ups.

Whether you're after a distressed property or not, the low prices and interest rates mean that "there's never been a better time to buy," Mr. Maloney says.

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