Is the Housing Crisis Real or Fake?
Everyone knows that the real estate market is cyclical in nature. About every 8 to 10 years, the market takes a turn for the better or worse. But is our current housing crisis truly genuine or just a contrived illusion?
Not since the days of the Great Depression have we experienced such a significant drop in home valuations. During the peak of the Great Depression, US home prices plummeted by 31%. Last Summer, they had fallen by 33%!
Real Estate Roller Coaster
Here's an intriguing video that depicts the real estate market since 1892 in the form of a roller coaster ride! Clearly, no one in their right mind would argue that our current housing crisis isn't real. On the contrary, for millions of Americans, it's a very difficult reality. According to the latest statistics, nearly 30% of homeowners are underwater on their homes (owe more than the home is currently worth).
Are We There Yet?
Remember that annoyingly long family vacation car ride where all the kids kept asking, "Are we there yet?" Well, the more pressing question on everyone's mind is "When will the housing crisis be over? Have we hit bottom yet? When will home prices start to rebound?"
According to some industry prognosticators, we've already hit bottom. While others, like popular listing syndication site, Zillow, suggests the bottom won't come until the end of 2012 or early 2013. Regardless of whether we've hit bottom or not, most analysts agree that it's going to be a very long, upward climb until we start to see any meaningful improvements in home valuations.
In the meantime, here are a few helpful tips to help you weather the current housing crisis:
- Stay within Your Budget - Live within Your Means. Your housing costs should translate into approximately 25% or less of your total gross monthly income.
- Learn to Be Frugal - Learn how to budget and control your spending habits. Keep your credit cards to a bare minimum and paid in full each month. Pay with cash whenever possible.
- Renting isn't a Bad Word - Take time to establish yourself career-wise and save a sizable nest egg for a down-payment before you consider buying a home.
- Build Good Credit - Work at developing and maintaining a solid credit history of timely payments.
When the real estate market does rebound, you'll be fully prepared to make your next move!
Learn more about the home buying process with one of our many guides available at the button below. They're all free, and full of information on the home buying experience.
(house: Flickr user woodleywonderworks)