When will it end?

It seems every time I read a news piece about the real estate market it’s always the same conclusion, prices continue to fall.  This song has been played out for 4 years now!  Is there any end in sight?  Interest rates are at an all time low and in some markets the affordability ratio has never been better.  So why then aren’t houses selling like crazy?  It’s a combination of factors.  People have gotten to the point that they expect prices to fall creating a standoff between buyers and sellers.  So prices fall, people wait to purchase, prices fall further, and a negative feedback loop is in place.  It’s a tough cycle to stop.  Another reason is financing.  Just as financing was too loose at the top, now it is too tight.  The pendulum always swings too far to the extremes.  Lastly, 8% of the population is out of work and this is what I believe to be the strongest factor in the lagging real estate recovery.   In the 1990′s , housing prices didn’t start rising again until 1994 and by that time, unemployment had dropped to 6%.  If we use that experience as a road map for where we are going, a recovery could still be a couple of years off.

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