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Bubble Trouble: Making Sense of Today's Real Estate

Bubble Trouble: Making Sense of Today's Real Estate


All of the major newspapers have had housing news in their headlines lately, paired with words that aren't at all positive. The most common word to describe the current housing market has been "grim." But what does that really mean?

The main point the papers have been pushing is that housing prices fell 6.7 percent in October, and that's a big change from the inflated prices we've seen in recent years. What's hurting markets? Basic supply and demand is a big part of it; there are plenty of homes for sale but nobody's buying them. On top of that, a big increase in home foreclosures has added to the supply.

It seems every economist out there has an opinion as to when housing prices will bottom out, and their estimates range anywhere from the middle of 2008 until the end of 2010. The Wall Street Journal explained that "grim" might be necessary right now:

The silver lining behind the latest home-price data is that they signal the market is making what most economists see as a necessary adjustment, dragging home prices back into closer alignment with Americans' ability to pay.

Has the housing news been keeping you up at night?

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