Home prices have been on the rise in many parts of the country. However, there are many potential threats to this recovery in the near future.
According to CNNMoney, the fiscal cliff could be one of the biggest issues. If Congress and the White House don't reach a deal between now and the end of the year, the economy could take a hit, which wouldn't be good for home prices. With less net income, Americans will be less likely to buy a home, which could threaten the price gains seen this year.
Additionally, the potential ridding of the mortgage interest tax deduction could also have an impact on real estate. This tax break was initiated to encourage homeownership, and if canceled, buyers may be discouraged from purchasing bigger, more expensive homes, as they wouldn't have the tax deduction on their mortgage interest.
Despite these fears, home prices have been able to increase for much of this year. According to the Standard and Poors/Case-Shiller Home Price Indices, U.S. home prices were up 3.6 percent in the third quarter.
Increasing home prices have been the driving force behind the real estate market's recovery, and if they are threatened the entire market could take a hit.