Photo: Courtesy of MGM
The real estate crash that never seems to end appears to be getting even worse. Home prices continue to go down, the number of underwater mortgages is soaring and the number of foreclosures set an all-time record in 2010.
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The peak of the housing market was in 2005 and the subprime mortgage crisis erupted in 2008. Shouldn’t things be getting better by now? How many years is this real estate crash going to go on for? Home builders and those that work in the construction industry are deeply suffering because new home sales continue to hover around record lows. Mortgage professionals are having a really hard time because very few people are seeking home loans and many of those that are seeking loans cannot get approved.
Real estate agents all over the country are pulling their hair out in frustration and large numbers of them have left the industry completely. The United States has never had such a prolonged real estate slump in the post-World War 2 era. Unfortunately, there are a whole lot of indications that the real estate crash is going to get even worse.
The rapidly rising price of oil, the horrific crisis in Japan and instability in the Middle East all threaten to plunge the world into another major economic downturn. That is really bad news for the real estate industry. Already there are not nearly enough jobs for everyone in the United States and without good jobs American workers simply cannot buy homes.
In addition, many of those that would like to buy homes are finding that they cannot get approved for home loans. Before the real estate crash, lending standards were incredibly loose, but now the pendulum has swung very far in the other direction.
Applying for a home loan today is roughly the financial equivalent of a proctology exam. Once upon a time banks and financial institutions were handing out mortgages to anyone who could sign their name on a piece of paper, but now mortgage lenders are being extremely, extremely tight with their money. This is making it very hard for the U.S. real estate market to recover.
In many ways, the U.S. real estate industry is starting to somewhat resemble a movie that Bill Murray once did entitled “Groundhog Day”. In that movie the character that Bill Murray played had to live the same day over and over.
Well, for the U.S. real estate industry every single month is a complete and total nightmare. But instead of being exactly like the previous month, each new month seems to bring news that is just a little bit worse than the month before.
Will this nightmare ever stop?