Home values may fall up to 25 percent in the next few years

The S&P/Case-Shiller Housing Index found a 0.7 percent increase in home prices in their 20-cities composite from March to April 2011, giving buyers and sellers a sense of optimism as they reassess their homes or purchases.

The Business Insider recently interviewed Dr. Robert Shiller, the Yale professor who created the S&P Case-Shiller Housing Index, on the future of the housing market. Shiller said prices could fall another 10 to 25 percent in the next few years, and not all home purchases turn out to be a good long-term investment.

However, according to Business Insider, Shiller's analysis does not acknowledge two economic benefits of home ownership: taking advantage of low interest rates and long-term inflation protection. Low interest rates allow investors to borrow money easily through low-cost fixed-rate mortgages, freeing up cash to be used for other investments. A home purchase also locks in the annual housing cost so buyers avoid falling prey to inflation.

Hometrack published a study that found June home sales increased by 10.6 percent from May, and The Money Expert reported that this is a good sign for those considering buying a second home. The news source offers three insights to potential buyers.

The Money Expert warns that any home purchase always comes with the added maintenance costs. It is best to purchase a home as an investment, not a vacation spot.

The news source also said that home ownership is a good investment and it would be smart to take advantage of the low prices if the buyer is in a stable financial position. Also the low prices should inevitably go back up and the buyer could make a good profit on the purchase.

Finally, the investment on the home could be put towards the buyer's retirement. Mortgage rates are competitive, and the new source said if the first mortgage has been paid off then the second mortgage will be easy to obtain.  

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