How will the real estate market collapse affect the US economy in the next 5 years?

Answer 1

It will boom again (eventually), just like it always does. It's a cyclical business, the trick is in timing the changes.
The overall impact of the real estate market on the national economy should be minimal. The people who are defaulting on mortgages now are the ones who shouldn't have been given loans in the first place. Fiscally sound people are not at risk. As a matter of fact, most of the buyers now are the ones with cash in hand, looking to pick up properties that are distressed and undervalued. It's not uncommon for them to, on paper at least, make $25,000 on a property the day they close. They have no liquidity, but they don't need it. When the market comes back, they will sell at a profit.
It is important to note also, that not all parts of the country collapsed. In general, those areas that suffered the most were the ones that embraced a higher percentage of gimmick mortgages, and consequently saw a big run up in home prices, as the increased supply of money chased a finite supply of houses.
In the near term, you will see a lot more homes for rent, or "Rent to Own". Another drop in mortgage rates would also help spur sales by making more people eligible for loans.

Answer 2

There isn't going to be any long-term effect. The slowdown in sales and the drop in prices will likely get worse for a while but I expect it to start improving in 2 years or so. The problem we have is due to an over-inflated market for houses due to easy credit. That's stopped. We will see more foreclosures for a while while the low rates on the subprime loans start increasing, but that will level off after a while.

The long-term fact is that the population is increasing, so there will always be a good market for homes. All the new people have to live somewhere.

In short, the slowdown in real estate is a blip caused by sloppy lending practices and sloppy government regulation. Both are slowly being corrected.

I will be much more concerned with the effect of high energy prices on the economy than with the real estate market.

Answer 3

I figure within the next 5 years the US with be in a full blown depression. Currently they are trying everything they can to hold things with the economy how they are but things like real estate, national debt, inflation, and the value of the dollar plummetting will throw this country into a depression for a number of years.

Answer 4

Will drive some realtors to alternative income sources - other home based income opportunities -- such as internet marketing. This will also greatly enhance current business, mitigate losses, and speedup the turnaround for those in real estate related industry.

Answer 5

initially there is not any nationwide genuine sources industry; it quite is all community and the factors thatchronic it are based on laocl furnish and insist subject concerns. Even right now there are factors of america that are doing respectable. confident, once you integrate the community numbers there is an avg. for a nationwide huge form yet that has little to no consequence on what your community industry is doing. the main important issue is that persons don't be attentive to the thank you to regulate their own finaces and act like lemmings to a huge degree. think of returned to the dot com bubble. people have been blindly following the group in the inventory industry and have been procuring by using fact all and sundry else became into procuring. while the final "greater suitable fool" jumped into the industry it crashed and the industry fell. comparable component right now in genuine sources; people who had NO business enterprise experience have been procuring "investment sources" wit no funds down, adjustable value morgages, and concept they could make a killing by utilising advertising to the subsequent "greater suitable fool". So it quite is quite not a "genuine sources" issue. that's a monetary administration issue. i think of that over the subsequent 5 years we can see a advance in the inventory industry by using fact the newborn boomers end fidgeting with genuine sources and start up putting their retiremnt funds returned in the inventory industry and attempting to rebuild for his or her retirement returned. the issue is going to be in 2012 with the aid of 2016; while a extensive % of infant boomers hit age 70 and a million/2 and by utilising regulation are compelled to start taking madatory withdrawals from their 401K money owed. there isn't sufficient youthful people investment their money owed to yet each and all of the mutual funds and shares that the newborn boomers would be advertising. greater sellers then clientele constantly propose that fees fall. what's going to infant boomers do if the industry starts to fall while they are 70? Will they "make investments for the long term" or will they sell each little thing and placed it into gold or silver? i don't be attentive to yet I plan on procuring genuine sources NOW and advertising all my shares till now 2012.

Answer 6

"I'm not sure, but I think it sounds extremely negative." -- Forrest Whitaker in Good Morning, Vietnam.

Ripple and multiplier effects would probably push this into a major recession, if not a full blown depression.

Answer 7

Its already slowly happening, the extintsion of the middle class.