Picture an airplane that has lost partial engine power...It must now use its own weight (by descending) in order to provide enough airflow over the wings to stabilize its flight - even though it is descending, it is stable. However, given enough time, it will eventually hit the ground. The analogy to the real estate market is fairly good. As the airplane descends, the people on board are tossing heavy, nonessential equipment overboard in an effort to reduce the amount of descent required and to eventually level-off or even climb.
What we are seeing with the real estate environment today is a multipronged attempt to arrest the descent. It is being effected by: recent legislation giving relief to some homeowners at risk of foreclosure, certain lenders foregoing the scheduled rate increases on adjustable rate loans, new home builders reducing their inventory, the Federal Reserve Bank is reducing their interest.....and the list goes on.
There are many moves out there to preempt a crash of the housing market, both on the public and private sides. In my opinion, the market should bottom out and start gaining some altitude by the end of this year. However, buying a home, in general, is a long-term prospect, and in the long term, it looks very good!
