Freddie Mac has warned that is sees four big risks for home prices over the coming year. They say to expect further decline in home prices nationally before any sustained turnaround begins.

The following are reasons for this prediction:

1) The Treasury Department introduced HAFA (Home Affordable Foreclosure Alternatives Program) in 2009. It took effect on April 5, 2010. This created a significant increase in distressed sales, including pre-foreclosure sales, foreclosure transfers and sales by financial institutions of their bank-owned properties. There is a substantial backlog of delinquent loans lenders developed over recent periods, due to various foreclosure suspensions and the implementation of HAMP (Home Affordable Modification Program). The expectation is that many of these loans will transition to REO (Real Estate Owned) and be sold in 2010. The additional supply of homes for sale may cause prices to decline further as the market absorbs them;
2) The extension of the Federal Homebuyer Tax Credit, for first time homeowners, expired April 30, 2010;
3) Mortgage rates may increase in 2010, making home buying less affordable;
4) There is a likelihood that unemployment rates will remain high.

This is certainly not good news for some homeowners. The Home they bought a few years ago may be worth less than they bought it for. But as is the case in everything, this too shall pass. You just have to be patient and wait for the market to turn around before attempting to refinance or sell the home.