The ABC’s Of The Great American Housing Crisis

End of The American Dream.com

It doesn't take a genius to realize that a horrific housing crisis in unfolding right in front of our eyes. Yesterday it was announced that existing home sales plummeted 27 percent in the month of July. Today it was announced that new homes sales dropped to the lowest level ever recorded in July. But why is this happening? Why is the American Dream still dying for millions of American families? Wasn't the recession supposed to be over by now? Weren't home prices supposed to be moving back up by this time? Well, in this article we will attempt to succinctly break down the ABC's of the Great American Housing Crisis. Hopefully this will help people understand why all of this is happening.

A - The Gigantic Mountain Of Unsold Homes Combined With Very Few Buyers Is Going To Force Home Prices Down

For decades, Americans could purchase a home and know that it was inevitable that the value of that home would eventually just keep going up and up and up. But those days are over.

Over the past two decades, we experienced a huge bubble in the housing market. As prices skyrocketed, home builders built homes like crazy and it seemed like virtually everyone in the world was getting a home loan.

But then a funny thing happened.

The bubble popped.

It turns out that millions and millions and millions of Americans could not afford all of those crazy mortgages that were being passed out, and foreclosures have set record after record after record over the last couple of years.

This has resulted in a gigantic mountain of foreclosed homes being forced back on to the market. As of this March, U.S. banks had an inventory of 1.1 million foreclosed homes, which was a new all-time record and which was up 20 percent from one year ago.

Meanwhile, banks and lending institutions have learned their lessons and now it is much, much tougher to get a home loan. Therefore, there are a whole lot less qualified buyers in the marketplace.

So with a ton of homes on the market and very few buyers, it is going to take a long, long time to get all of those homes sold. In fact, there is now over a year's worth of unsold homes sitting on the market in the United States.

And do you realize what happens when supply is very high and demand is very low?

Prices go down.

Right now home owners are very hesitant to lower the prices of their homes much further, but if they want to sell their homes, that is what has got to happen.

B - Without Good Jobs The American People Cannot Buy Homes

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