1. The Federal Reserve has created a storm through interest rate manipulation: The Fed artificially manipulated the housing market to drive-up home prices thus creating a financial storm and volatile market for existing and wanna-be homeowners. First the FED first began lowering interest rates to 40-year lows in 2002 thus creating and artificial demand for housing as an investment. Then the FED started raising rates.
2. Those interest-only and ARM mortgages are now resetting. Payments for millions of homeowners are shooting upward due to exotic mortgages coming due. Some bubble markets have been upheld by such exotic mortgages over the past few years with use of "creative financing" accounting for up to 75% of loans in recent years, in many areas. In 2007 America will see over 1 trillion dollars worth of adjustable loans reset. Many believe that in late 2007, we will see the largest and fastest home price crash of ALL-TIME!
3. Rents haven’t kept up with house prices or mortgage payments. New landlords cannot charge enough rent to cover costs of owning a bubble home due to higher taxes, insurance, and interest payments. Increasingly, people are better off renting than buying. It all adds up to less demand.
4. The investors are running for the exits Investors and flippers are now seeing negative returns and many markets!. Hundreds of markets are seeing prices fall. Its hard to make money flipping houses when prices are dropping.
5. Inventory is rising with a fury. Too many sellers chasing too few buyers means falling prices. Investors are starting to panic while holding costs and higher taxes are taking a toll on many homeowners. Inventories in most major metropolitan have begun to race upwards and some areas are now sitting atop all-time high inventories of homes for sale!
6. Lending standards are getting tougher. It used to be that anyone with a heartbeat could get a loan. After the sub-prime bust and foreclosure storm began to hit, many lenders tightened their standards thus locking millions of lower credit profile borrowers out of the market. The result is even slower sales, inventories rising faster, and prices sinking lower.
7. When the economy sinks, home prices sink. Construction, furniture, and other home dependant industries will start laying-off workers now that the housing market is starting to drop. It has been estimated that 30% - 40% of all jobs created in the past few years have been housing related. The slowing and lay-offs will have a snowball effect on housing and the economy to push it over the edge!
8. Home values have started to drop all across the country. It's difficult to keep up with all of the news about falling home prices. Literally hundreds of markets are seeing price declines now. When the general public finally realizes that home values are falling, all sane buyers will be scared away and then the crash will really begin!
9. The Public is becoming aware of the Real Estate Bubble Crash to come. Bubble blogs and news pages like http://www.homepricebubble.com/ are waking people up and cutting through the realtor hype and controlled media propaganda!! This awareness should alert more people not to mortgage their futures away because some realtor says it's a good time to buy (and a good time to make commissions off of your indebt-ness!!)
10. Foreclosure are on the rise.When home values begin to stall and fall people can no longer borrow against the equity in their homes. Owning an expensive home also increases other costs such as insurance, property taxes, and more. When homes can no longer be used as ATM machines, foreclosures start to increase. Foreclosures are increasing in most areas now and in some areas they are doubling and tripling from last year!
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