Drop in home values expected to be bigger than previously thought

David Wyss, chief economist for Standard & Poors indicates home values have a lot more to drop before they will begin to recover. His report indicates an 8% drop in values expected for the 24 month period from January 2007 through December 2008. He sites the increasing number of foreclosures as the main reason.

This is not an unreasonable expectation. Foreclosures result in lower values in a given neighborhood. If a home in your neighborhood sells through a trustee sale it is likely that it sold below the perceived value for the area. This effects the future appraisal values in your area as this will be used as a comparable by the appraisers. Thus, an increase in foreclosures certainly can bring prices down. 

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