CHAPTER 11 Housing market changes

Over the last decade or so, real estate has taken some heavy blows in the values of houses, due to the incessant fluctuation in the value attached to homes and a sometimes-unstable market, causing a setback to investors in real estate. At the start of the new millenium, there was an unprecedented increase in the prices of real estate, resulting in the burst of the real estate bubble in 2006 and the beginning of an even greater financial crisis. A deep fall in the prices of real estate followed immediately, with the Case-Shiller Home Price Index losing 33 percent from its 2006 apex. Investors flooded back to real estate, knowing full well that getting in at this lowest point could be very lucrative for them. Since the start on the recovery of the housing market, there has been an annual 10 percent increase in price on the national real estate market, according to the Case-Shiller Home Price Index Report. This rapid price increase has greatly reduced home inventory in the real estate market because most potential sellers are very careful in taking part of what seems to be a buyer’s market. This can be very frustrating, especially for first-time home buyers faced with a double threat of banks being cautious of lending to any new individuals and homeowners reluctant to sell while there is a good prospect of a price increase if they just hold out a little while longer.


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