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How Low Will the Home Prices Go?

As the housing market continues to decline, many people are wondering just exactly how low the home prices will go. While it might be fun in the ever popular party game to see how low you can go, when it comes to real estate it can be somewhat dicey to determine whether you should buy now or continue to hold out and wait to see if home prices will go even lower. According to the National Association of Realtors, it is expected that the market will experience a sale recovery sometime during the last portion of the year 2008. Of course, considering the source of the information, it is somewhat difficult to rely on this forecast 100%. Certainly the more than 1 million NAR members are sitting on pins and needles, waiting to determine whether their median earnings will continue to fall or experience a resurgence sooner rather than later.

In taking a further look at statistics, it quickly becomes apparent that the turn-around that has been greatly hoped for by most real estate agents is not going to occur anytime soon. This is evidenced by the overall decline that most realtors are seeing in contract signings around the country.

In considering whether the real estate market will stabilize or continue to fall, it is important to look at a variety of factors. Location has always been an important element in the real estate market, but it has never been more important than it is at the current moment. There are some markets that have actually experienced upswings, despite the current state of the real estate industry. Within these markets, it is not uncommon for home sales to double over the previous year. Then, of course, there are those markets where contract signings have essentially been cut in half.

Location is not the only factor that can affect price conditions; however. Price conditions have been proven to vary significantly even within the same locality. One of the primary contributing factors to this phenomenon is whether a neighborhood has access to subprime loans.

Individuals who are considering purchasing a home should definitely take the time to do some research ahead of time in order to make sure they understand the various factors regarding the area in which they plan to purchase. It should also be understood by prospective home buyers that they are definitely facing a buyer's market. The rapid decline of home prices as well as the large price declines themselves has certainly enticed a number of buyers out into the market. As a result, if you have your heart set on a home it may not be a good idea to wait it out to see if prices will fall even more or you may find the rug pulled out from beneath your feet, so to speak, by another buyer.

Despite the current state of the real estate market, there have still been reports of multiple offers on certain properties following significant price cuts. This means that it is entirely possible that the largest price cuts have already occurred within these areas. While this may be a situation that is isolate to particular locales, it should still be understood that the possibility definitely exists that prices will not continue to drop further within those markets.

When considering whether prices will continue to fall, the rising price of energy costs and the economic struggle which many people are facing should not be left out of the equation. Estimates indicate that there are at least 120 million homes situated within the United States. Around 30% of those homes are owned with no mortgage. The remainder of those homeowners is responsible for not only the everyday costs of maintaining a home but also a mortgage and insurance payments as well. As a result, it is estimated that some 5 million homeowners who are already at risk of potentially losing their home may be joined as others as a result of escalating energy costs when homeowners realize they have no other options left available to them.

Ultimately, the key to determining whether you should try to wait it out a little longer to determine whether prices will continue to fall or whether you should act while the iron is hot will depend on your individual situation and the locale in which you plan to purchase. Make sure you take the time to do some thorough research to determine what is going on within your local market and determine whether now really is the right time for you to purchase.



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