Why has this happened? Many housing markets that experienced huge appreciation were out of line with their true market values. There were gaps between housing prices and what that local economy could sustain based on projected or true job growth in many regions of the U.S.. These key value indicators were seriously out of alignment. This misalignment, in some instances, left a lot of room for prices to freefall or take large corrections in order to reach a cost vs. value ratio or fair market value.

In a normal functioning market housing demand supports market growth and keeps pace with emerging jobs. Typical appreciations in these areas were between 5% or 6%. Problems began to emerge when this appreciation soared in excess of 50% or 100% or more in a short period of time. At the same time taxes and insurance rose dramatically to keep pace with the rising prices in the marketplace. People were caught up in the ether and invested at previously unprecedented rates hoping to get rich quick. Jobs and other economic indicators did not support this appreciation.

Record numbers of people are now finding themselves in foreclosure because they are either upside-down in their properties or have seriously overextended themselves. Banks and other lending institutions are scrambling to process the mountains of paperwork this creates, but also neglecting to take some responsibility in this mess. Most advisors are forecasting this housing slow down/stagnation and credit crunch to continue for at least the next couple of years. Amidst this sad news there are glimmers of hope and good deals for those savvy enough to purchase in this down marketplace.

Interest rates remain low despite the glut of real estate inventory across the USA. Places that have been considered bad real estate buys and overpriced housing for today’s dollars include; New York City (NY), Miami (FL) and much of Florida, Reno (NV), Atlanta (GA), Boston (MA), Los Angeles (CA) and most of the great state of California (even though jobs are forecast to grow there-housing prices are still too high to be a good value). Contrarily, places that have been touted as good places to buy or invest in real estate are; Austin, El Paso, and Houston (TX), St. Louis (MO), Baltimore (MD), Durham (NC), Minneapolis (MN), Indianapolis (IN), Panama City (FL), and Baton Rouge (LA).