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In some of the worst housing markets in the country,
deflation has reached double-digit proportions. While
housing woes have reached around the country, 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 has also proven to be a difficult market
at the moment. Here, the weak mortgage market and record
high rates of foreclosures have let 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 spiraled 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. One of the primary
reasons that Florida and California were poised to fall
so rapidly were rapidly escalating home values during
the boom a few years ago.
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
still poised for problems in the housing market. 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 home 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 home buyers may soon find the relief they
have been seeking since they were forced out of the
market; however, it may 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 that was
possible just a few short years ago.
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