Why real estate market is down when all markets have gone up?What”s wrong,in spite government’s support?



All the markets have gone up (commodity,gold,oil.stock etc) then what is wrong with real estate market? why it is still stagnated in spite of government effort to boost

Why real estate market is down when all markets have gone up?What”s wrong,in spite government’s support?
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3 Replies to “Why real estate market is down when all markets have gone up?What”s wrong,in spite government’s support?”

  1. What is “wrong” with real estate is that it went up WAY to much WAY too fast. Over the past 80+ years, real estate has only appreciated about 3-4% annually. During the last 7 years, it appreciated almost 400% in some areas. When that happened, responsible people could no longer afford to buy a house based on the 20% down payment and 31% of gross income rules. What is happening now is a correction of those prices. In order for the market to make a come back, prices need to regain their reasonableness. In some of the roughest parts of Los Angeles, houses that are 2 bed, 1 bath and 800 sq feet are going for over $500,000. The people who are generally crying about real estate prices are those who bought into the craziness and were looking to make quick easy money. A VERY easy review of historical appreciation would have told anyone with half a brain that residential real estate is NOT the way to make it.


  2. some of those whose homes went into repossession (default) are in the process of trying to solve those thru government programs. There is a second wave to hit (of balloon payments) yet from those bad mortgages and more people will be losing their homes.


  3. Many, many factors are involved.

    First, the real estate market is historically very slow to respond to other market fluctuations. It’s curve lags behind that of the others and isn’t generally as volatile.

    Next, too many loans were made to people who really shouldn’t have got them. Whether it was fraud on their part or on the part of the loan officer, or gambling that property values would rise before their higher adjustable interest rates kicked in isn’t important other than it has resulted in a record number of foreclosures. So credit has tightened up as lenders have raised requirements that should not have been lowered in the first place (thanks, Barney Frank and Chris Dodd).

    Unemployment is taking its toll on homeowners as well.

    In many places, the market is overpriced and still has a way to come down. Some of this is due to appraisal fraud, where people took more and more equity out of their homes due to inflated appraisals, and now end up owing more than the home is really worth.

    People with good credit and adequately captitalized are not having a problem obtaining credit and finding homes.

    It all boils down to the supply exceeding the demand, which always keeps prices depressed. There are a lot of homes available on the market right now, and fewer people who are shopping for them. If we can get jobs back again, the demand will start to creep up and supply will creep down, and things will change. But it’s going to be a long road to get there.





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