Bleak Future of the Housing Market

It is not impossible to find that deflation has actually reached horrifying double-digit proportions in certain parts of the country which have been badly hit by the bad economy. Of these many badly hit places where housing is concerned; California seems to be having been hit the worse. Why is that so? The main reason is actually because it is in California where the home prices have dropped the most and at a most unbelievable rate in history too.

Apart from California, Miami, Florida is another market facing a terrible market. In this state, the low market for mortgage, coupled with the sky-high rates of foreclosures has caused home values to drop drastically. Miami is actually one of the worst hit in home markets for one just one but a consecutive two years. Despite the fact that there was a condo boom in Miami a few years ago, that has not help Miami in anyway but has in fact served to make matters worse because it has caused a great real estate bust.

As such, it has been easy to guess that California and Florida will be the one of the first housing markets to give way when the real estate market crashed. However, there are other states where nobody expected the real estate market to crash. Such markets include places such as Arizona, Nevada, Indiana and Massachusetts. It could be due to the fact that these markets did not rise as fast as California and Florida, and so they avoided the crisis until now. In addition to the fast falling home prices, the foreclosures rates are also very high, thereby adding on to the already terrible real estate market conditions. a significant increase is noted in the number of layoffs which is probably caused by the bad economy.

In many markets, the problems are expected to worsen because many million people are expected to see their adjustable rate of mortgage scheduled to be reset in the months fast approaching. When that happens, more homeowners will find that they are unable to pay off their monthly mortgage payments. As they are not likely to get refinancing, these homeowners are likely to have to make a short sell on their home.

Many statistics indicate that home values could continue to drop and new homes could experience a loss of up to 18% before the year is out. As such, the remainder of 2008 is still poised for problems in the housing market. Although there have been some indications that the market could begin to level off at the end of 2008 or the start of 2009, many experts are quick to warn that when the market does begin to rebound it will not reach the point where it had left off. The rebounded market will be relatively low as compared to the housing peak of 2005. This is partly because prices have escalated so alarmingly fast that the prices could never rebound back to the original point.

Nonetheless, it is only a matter of time before the economy rebound back and even if it will not reach the point like before, it might be reassuring to some to know that the economy downturn is not here to stay. The future of the real estate is still bright if the homeowners are able to hold out till then.