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house for saleMany real estate analysts have stated that the housing market may have finally hit a bottom and that prices are beginning to stabilize. Mortgage lenders have tightened up their lending standards and many of the mortgage products which got consumers into situations where they couldn’t pay their loans are now off the market. There are still a large number of foreclosures but savvy consumers are purchasing them and the $8,000 first-time home-buyers tax credit is creating additional home purchases.

Although there are some signs of recovery, the market will likely hover near the bottom for some time to come. The reason for this is that during the real estate boom, many more homes were built in the United States than were actually needed to meet the natural demand of population growth. Some estimates state that anywhere from 2 million to 10 million extra homes extra housing units were built that were not needed in the United States.

Most economists are predicting that the recession will end sometime during the second half of 2009, but the housing numbers will likely take longer to recover because of the relatively high unemployment rates. People that might otherwise be purchasing homes are either unemployed or underemployed. Other people who are gainfully employed fear the possibility of unemployment, so they save as much cash as possible and avoid major purchases such as buying a home.

Although it may take a few years for a full national housing recovery, there is significant opportunity for investors. Individuals looking for a rental property, a second home or a retirement home have a chance at purchasing a home at a steal. Currently 13% of mortgages are in default and there will continue to be a large number of foreclosures. These distressed properties will be able to be acquired by investors at a significant discount and sold for a profit, if managed properly, when the housing market recovers.



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