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.

8. How easy will it be to get a mortgage during the spring market?

Don Ryan/AP/File
New townhouses shown in Beaverton, Ore. last year. Some economists believe that lending for mortgages has become too tight, stifling the market's recovery.

Interest rates may be very attractive, but by other measures credit is not "easy." People with strong credit scores and money for a 10 percent down payment can get loans, but bank standards for mortgages still haven't eased up in response to an improving economy.

It's not hard to see why banks are wary, given the uncertainty about home prices and the high rates of default on loans issued before 2009. But some economists say the pendulum has swung too far from loose to tight.

"We believe home sales could actually be 15 percent higher than what we have recently experienced," if credit conditions were more normal, says Yun of the NAR.

If lending conditions improve, that could increase demand for homes even if interest rates are rising.

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