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Why home prices won’t rebound in 2011

Posted on 21 December 2010

From Seekingalpha.com: Residential real estate is weak, in part, because the prices leading up to the peak in 2005 were wildly unrealistic and irrational. You can’t explain it with inflation, building costs, or potential rental income. It was just a mania, fueled by ultra-low interest rates, super-EZ credit and the unshakeable belief that “real estate always goes up.”
Some analysts say housing is weak because of the tepid recovery and high unemployment. But that doesn’t begin to tell the tale. At the end of the third quarter, 10.8 million American mortgages were underwater (i.e. when borrowers owe more on their homes than what they’re worth). This accounts for 22.5% of all U.S. homeowners with a mortgage……………………………………….Full Article: Source


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