Real estate price trends in the US are simmering in the sun that continues to set over the fool's-gold-rush that pumped house prices to untenable highs just a short while ago. The pump was primed, or rather sub-primed, by widespread questionable mortgage lending, that anyone with even a modicum of 'economics' knowledge must have known was dangerously sandy ground to build a boom on!
Looking around the local housing markets in the US, price deflation has reached double-digit proportions in some worst hit areas. While housing woes have hit the whole country, California real estate price trends indicate that it will figure among those areas worst affected. A major reasons for this is probably that during the last few months the so-called "Golden State" has begun to look tarnished, experiencing as it has the highest rate of falling home prices. Indeed, recent drops in typical Californian home prices are regarded as without precedent.
The Sunshine State, and Miami in particular, has also been suffering a 'cloudy period' in terms of house prices. The damaged mortgage market and exceptional numbers of foreclosures have led to rapid a decline in Florida real estate values. Let no-one be under any illusion that this has been just a recent occurrence, either, for Miami has now proven one of the worst US local real estate markets for the last two years. The boom in condominium sales prior to this period has simply added fuel to the fire, and in effect the local market is in the midst of a real depression..
Perhaps Florida and California were easy targets to sight when it comes to the likelihood of crumbling when the pressure was on, but some of the other local US housing markets teetering on the brink of the recessionary precipice have been harder to predict. One of the main reasons that Florida and California were set-up for a fall was the fact that so many folks had "made gold while the sun shone" on the housing market, particularly in these appositely nick-named areas.
However, due to the fact that other areas did not experience the speed, or size of the property value rises, they have so far avoided being top of this doleful chart. But in such local markets as Arizona, Indiana, Massachusetts and Nevada, the impact of downward real estate price trends, and escalating foreclosure rates are also contributing to deteriorating property market conditions. In yet other areas, such as Michigan, it is the general economic downturn, leading to numerous job losses, that has also been impacting on the local housing market.
The further factor that promises to make things look even bleaker is that many millions of adjustable rate mortgages are due to be upwardly revised in the coming months. When this happen, it is quite likely that even a good proportion of those who would not have been considered sub-prime will also struggle to meet their mortgage costs in certain areas; particularly if take-home income has been hit in any way. Some will inevitable face the double edged sword of either experiencing foreclosure or having sell themselves short, by under-pricing their home for a quick sale, especially as arranging a refinancing package is becoming less available, or viable.
Almost all the economic forecasts indicate that what remains of 2008 will prove even more problematical for the housing market. Many statistics imply that home values will continue to drop and even new homes look set to experience a loss of almost 20 percent before the year ends.
Although the most optimistic indications suggest that the market problems could start to level off towards the end of 2008 or early 2009, most experts are still admonishing even when there is somewhat of a recovery, the market is unlikely to match its previous highs. This means that prices could still fall well short of the peaks reached in 2005. The speed, or height of the price escalation during the "sub-prime" hey-day is unlikely to be matched again any time soon!
Nevertheless the future may be rosier for certain areas. This is particularly the case in areas that were less impacted by sub-prime mortgage madness, or where the such mortgagees have already been forced out through foreclosure. There is also the potentially positive impact of the hotly-anticipated stimulus package could the local housing market in many areas.
It could soon be that US real estate price trends offer first-time home buyers the relief they have been needing in order to get a foot on the property ladder. But, for home owners already in the market, it may be a lot longer before they really feel any benefit. Naturally, perhaps, most homeowners still fight shy of accepting they have lost the equity they once notionally had in their homes. The plain fact is that many property owners have yet to wake up and realize that the worth of their homes is just not what it may have seemed to be on paper, during the halcyon days of booming property price trends a mere three years ago.
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