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Real estate values have steadily increased since the 1980s, then skyrocketed from 2000 to mid 2007. The low interest loan environment and new regulations allowing traditionally unqualified buyers to purchase, created a feeding frenzy in the housing market. Add to the mix thousands of speculators jumping in on what looked like a real estate gold rush. The result? Strong house values that looked like they would never collapse.
The Economic Meltdown
The economic recession has wreaked havoc with house values in most real estate markets worldwide. Without getting into an explanation of how it all happened, we can say that in recent years a buyer could pick up a house with no down payment, an interest-only loan, or a low ARM, and be reasonably sure that by the following year the value of the property would increase up to 30% in value or even more.
Easy access to 'cheap money' allowed the buyer to refinance his home, use his "instant equity" as discretionary income, and begin the cycle all over again. Home equity has been the preferred method for most Americans to "get ahead" for some time, since wages have been stagnant.
Rising housing markets can make you rich very quickly, but falling markets can make you poor even faster. Recently, many homeowners have felt the sting of a falling market.
Make no mistake about it: housing markets are cyclical. The recovery of the real estate market is likely to be slow in most areas, as house values adjust to current supply and demand.
In the short term, housing markets will likely continue to correct in response to the money supply and house values may remain relatively low. Ultimately the desire to own a home is still driving homebuyers into the market again.
House values and afforability with good financing options are the key to homebuyers and the revitalization of the housing market.
More Information About Real Estate...
Is It A Good Time To Buy A House?
Sell Your House for The Best Price in Any Market
Real Estate Investing
What Is A Short Sale And Why Bother?
Selling Short ... What Do All These Short Sale Terms Mean?
Buying A Home After Bankruptcy

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- SubPrime Mortgage Crisis
- What Is The Best Mortgage For You?
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