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Housing Market crash in US For decades, investment in real estate has always been one of the key profit areas of for banks and other financial institutions. Investing in a house was always considered to be the one of the safest way to safeguard one’s money. Owing to this investment fundamental, people continued investing in real estate during the period between late 1990’s and 2005 even though the prices were reaching their all time highs. With banks and financial institutes sinking, the condition of housing market has become even more volatile. The housing crash, however, did not happen overnight. A number of factors contributed to the housing crash resulting extensive foreclosures and plummeting housing prices to their all time low. One of the main cause for the housing crash lies in the fact that banks and financial institutions were lending mortgages at 5 to 10 times the annual incomes of people, which was way above the safe value of 3 to 4 times. These financial powerhouses used aggressive terms and conditions but did very little scrutiny while providing mortgages. This led to an easy cash flow in the market which fueled the housing prices as well. The US economic meltdown also played a major role in the housing market crash world over. Foreign investors who had invested in the real estate market in US had to declare bankruptcy owing to massive loss. The housing crash is expected to cost the banking system a whooping $2 trillion dollars. Today the housing market is facing a multitude of challenges. The bleak economic situation of US, growing unemployment rates and plunging housing prices has paved the way to an uncertain future where the road to recovery is certainly going to be very long and tedious. It would probably take considerable time to recover the housing market and reinstate property values back to normal. As real estate pundits construe that buying house at this present juncture is not a sound idea especially on the coasts. Housing experts believe that it is absolutely unadvisable to buy a house now since the prices would plummet even further. As trends suggest that in the near future the home prices would certainly collapse further since home prices have not reached it bottom low. Prospective buyers should not invest their savings in buying a house now instead should keep the savings handy and invest when the prices have reached its bottom low. |
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