Reasons behind the Proposed Real Estate Market Rebound in 2009

When compared to the past few decades, the year 2007 remains among the worst years for real estate markets. Some people have begun comparing the current downfall with the historic downturn that took place in the 1980s. Though it is still not likely that the prices are going to improve during the current year, there are certain indications of recovery for the market within the next year. This may indicate an increase in the prices that fell sharply over the past few months. A good reason behind this anticipation is the frightening fact that the price is likely to hit rock bottom this year and prices simply cannot begin to improve until such a time.

To better understand the possibility of recovery, one must first analyze the factors contributing to the current market slump. One such factor is the doubling of prices that occurred in many states between the years 2000 and 2005; and in fact, there was even tripling in some cases. As such, a very significant number of people, particularly first time buyers, became unable to purchase homes. With a continuing decline in the number of persons able to afford homes, housing sales and prices also decreased.

Lately, news headlines have confirmed lately that sub prime loans have also been contributory in the recent crash. A great number of the loans that were issued over the past few years were actually for buyers who had below average credit scores. Moreover, many loans had been issued with minimum down payments. As real estate prices ceased to increase two years ago, many buyers were surprised to discover that the value of their mortgage had already surpassed their home's current price by a significant amount.

As a result, the number of persons defaulting on their loans began to increase and foreclosure rates quickly followed suit. With an increased foreclosure rate, people are now even more eager to sell their homes. To make the situation even worse, the country is now embarking on an economic crisis and the resultant layoffs in many states have further increased the rates of defaults and foreclosures.

Though a great deal of time has already passed, homeowners are now being offered assistance which may act to slow the rate of increase of foreclosures. It is furthermore expected to assist in stabilizing the market by reducing the high property inventory throughout the country.

A critical point to be noted is that though newspapers are continuously expressing their worries regarding the real estate crash, there still remain some areas where prices continue to increase rather than decrease. On average, national real estate prices are approximately 5% lower than the previous year. Nevertheless, many urban areas continue to experience increases. This is mainly because of first-time home-owners who are still able to afford to purchase homes as well as retiring homeowners now seeking to sell their homes and relocate to retirement communities or smaller properties. These areas include Bismarck, North Dakota; Beaumont, Texas; Salt Lake City, Utah; and Charlotte, North Carolina.