I am “assuming” that since FNMA is nationwide, the 15 -19% (predicted) additional price drop is not necessarily applicable of our Los Angeles Housing Market.  In our market, I have noticed that buyer activity has increased.  Home inspectors, title and escrow companies are also busy (I know, because I ask them - business has picked up).  It appears that prices have reached a level that are attractive to home buyers and they are again buying.



WASHINGTON (AP) - Fannie Mae's CEO told shareholders Tuesday that the housing market is "about halfway through" its crisis and home prices could fall as much as 25 percent before the worst is over. …………….Fannie officials later clarified his remarks to note that Mudd was not referring to the company's own forecast of home prices, made earlier this month, which is for an average price decline of 15 percent to 19 percent.
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I believe that if interest rates increase that prices will continue to fall to offset the payment. This calculation was given to my by a mortgage lender:  “for every 1% increase in mortgage interest rates, you will need a 10% drop in property values in order to afford the same payment".  An example, if interest rates increase from 6% to 7%, then a current home valued at $950,000 will have to decrease to $856,000 to keep the same mortgage payment.

It is interesting that FNMA  would make this “prediction public" because negative news can put the skids on what appears to be a Los Angeles recovery…