End of the Road for Housing
Late autumn, early winter will end any debate concerning whether a housing bubble exists, but the extent of the bust won’t be seen until later
Over the past seven years the single constant within the financial news has been the continued appreciation of home values. In many markets along the nation’s coasts, homeowners have seen their home’s value skyrocket by 200% in the matter of just a few years. The real estate boom began in the late 1990’s as rising incomes and expanded economic opportunities granted more families the ability to purchase their own home. Despite the recession that followed, low interest rates created enough of an incentive for further housing activity that offset the negative impacts of the economic downturn. The favorable conditions that have fueled housing during the past seven years are slowly beginning to reverse. The combination of rising interest rates, over speculation, and destabilizing economic unbalances will in all likelihood cause the housing bubble to unwind disorderly.