A Look at the Future of the Housing Market

In some of the worst housing markets in the country, deflation has reached double-digit proportions. While the entire country is reeling from this economic downturn, California appears to be poised to rank among the worse.

 One of the primary reasons for this, is the fact that in the last several months, California has experienced the largest rate of deflating home prices. In fact, home prices in California have fallen at levels that have been unprecedented. Miami, Florida is another major city that has been hit hard at the moment. A twofold reason for this is because of the weak mortgage market and record high rates of foreclosures have lent to decreasing home values as well. In fact, Miami has been among the worst home markets in the country for two years running.

The condo boom in Miami just a few years ago has fueled further problems that have now spiralled into a massive real estate bust. While Florida and California may have been easy to predict as being among the first housing markets to crumble when the real estate market crashed, there are other markets that are on the precipice of falling which have not been as easy to predict

. Because home values escalated so rapidly, only a few short years ago due to the real estate boom, places like Florida and California were poised to take a dramatic fall. Other markets; however, did not rise as much or as quickly, which could be one reason why they have managed to avoid reaching the top of the list; at least until now. These markets include Arizona, Nevada, Indiana and Massachusetts. Declining home prices as well as high rates of foreclosures in these states are also contributing to their worsening real estate market conditions.

 In Michigan, where layoffs have been significant, the economy is playing a strong role. Problems are expected to grow worse in many markets as several million adjustable rate mortgages are scheduled to be reset in the coming months. As these mortgages are reset, it is logical to assume that even more homeowners will find themselves facing the reality of being unable to pay their monthly mortgage payments in certain markets. When that happens they will be forced to either face foreclosure or in some cases make a short sell on their home as refinancing is becoming less and less of an option for many homeowners. According to most statistics, the remainder of 2008 is not looking well in the housing markets. 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. While there are some indications that the market could begin to level off at the end of 2008 or the beginning of 2009,

Many experts are quick to warn that when the market does begin to rebound it will not reach the point where it left off. In comparison to the housing peak of 2005, the rebounded market could still be quite a bit lower. Part of the reason for this is that in many areas, prices escalated so quickly that there is simply no way for prices to rebound back to that point.

 Still, there may be some hope for certain areas. In many markets sub-prime mortgages have either left the market through quick sales or foreclosure. The stimulus package that is on the horizon is anticipated to help the housing market in many areas. First-time homebuyers may soon find the relief they have been seeking since they were forced out of the market; however, it may be longer before homeowners begin to experience that same kind of recovery. This is because most homeowners are still reluctant to sell and lose the equity they once had in their homes.

The simple fact is that many homeowners have yet to accept the fact that they can no longer get the same prices for what was possible just a few short years ago. So what can you do if faced with foreclosure? Are there steps that you can take to prevent losing your home? Yes there is!