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Looking into the Housing Market's Future

The housing market across much of the country has fallen tremendously. There has been double-digit deflation in the worst areas. One of the worst areas is California with homes prices falling drastically in the past several months. California has never seen home prices falling this much in such a short time and it may not be finished yet.

Another market that is seeing hard times in the housing market is Miami, Florida. The mortgage market is weak and there are very high rates of foreclosures. As a result, home values are dropping. This has been the case in Miami for the last two years, making Miami one of the worst housing markets in the country. Not too many years ago, Miami had a rush on Condos and this has helped lead to the current bust in real estate there.

It may not have been hard to predict California and Florida being the first housing markets to feel the sting in the crash of the real estate market. But there are other markets that are about to fall that were not so easy to see coming. A big part of the reason for California and Florida markets to fall so far so fast is because they had a real estate boom a few years ago that saw prices climb very quickly.

Other places didn’t have such real estate booms so prices didn't rise as fast. This explains why they didn't have the falling home prices until more recently and weren’t as predictable. Nevada, Massachusetts, Indiana and Arizona are among the less predictable markets. Large numbers of foreclosures and falling home prices are helping to cause the real estate markets in these states to get continually worse. Massive layoffs and a worsening economy in Michigan is pushing that state to a housing market crash as well.

In the next few months, adjustable rate mortgages by the millions will be reset, causing many markets to get much worse. When this happens, many people in certain markets will find that they can no longer make their monthly mortgage payments. Refinancing won’t be an option for many people, so they will be facing selling their homes at a loss or going into foreclosure.

Statistics show that the rest of 2008, will still see worsening problems in the housing market. These statistics show that home values will keep dropping and new homes will have an 18% loss by the end of the year.

There are signs that the market could start to level off by the end of 2008, or possibly the beginning of 2009. But experts say that it is unlikely to go back up to the home prices that were seen before the crash. Prices will not get to the levels of 2005 home prices when prices were at their highest. This is because prices rose so fast that it isn't possible for them to reach that level any time soon.

Not all markets are down now. Some may avoid as big a crash as other areas because of foreclosures and quick sales taking sub-prime mortgages out of the picture. The housing market in many places could be helped by a stimulus package that is planned for the near future.

The first to feel the relief will be the first time homebuyers who had to put off buying a home. Current homeowners won’t see much recovery for a while longer, though. There will be a reluctance for homeowners to put their homes on the market and lose the equity they used to have. Quite a number of homeowners don't yet want to believe they can't get the same prices for their homes as they would have been able to a few years ago.