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Still a good time to buy and prices will continue to drop. Never say never. News that the median home price would drop, now about $200K, put a kibosh on the idea that it never would. The housing crash has the hallmarks of any bubble, whether Internet or real estate, fed by hype from inside the real estate industry, risky loans, borrowing on a home where the price was inflated, ARMs to those with poor credit or in unstable job situations, the crash should not come as a surprise.
Unless the real estate downturn is much worse than economists are expecting, the declines will not come close to erasing the increases of the last decade. And for many families who do not plan to move, the year-to-year value of their house matters little. The drop is, of course, good news for home buyers.
It does, however, contradict the widely held notion that there is no such thing as a nationwide housing slump. A 2004 report jointly written by the top economists at five organizations — the industry groups for real estate agents, home builders and community bankers, as well as Fannie Mae and Freddie Mac, the large government-sponsored backers of home mortgages — was typical. It said that “there is little possibility of a widespread national decline since there is no national housing market.”
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