PRINCETON, N.J., Feb. 15 /PRNewswire/ -- The end of the housing bubble
could mean substantial losses in home value for millions of Americans, reports
RealEstateJournal.com, The Wall Street Journal's guide to property. Housing
prices, adjusted for inflation, are up 36% since 1995 -- the steepest boom in
at least 50 years -- according to the Center for Economic and Policy Research
in Washington, D.C.
Although the overall economy could bear a flattening or modest decline in
house prices, many young Americans -- who were encouraged to buy homes because
of low interest rates or government homeownership programs for low-income
individuals -- could experience financial hardship when the housing bubble
bursts. And, if interest rates rise, some buyers who stretched their
purchasing power with adjustable-rate loans and interest-only mortgages could
face financial problems.
"As long as prices remain near today's levels, most homeowners will still
have a lot of equity against which they can borrow to finance other types of
spending," says Valerie Patterson, senior producer, RealEstateJournal.com.
"However, if housing prices take a nosedive, many families would be unable to
sell their home for enough to pay off the outstanding mortgage."
RealEstateJournal.com offers this advice for potential homebuyers:
* Figure out how much you can afford before looking at a property.
* Try to put down at least 20% of a home's cost.
* Borrow what you need to borrow, not what you can borrow.
* Understand your arrangement with your real-estate agent.
* Hire a lawyer who is familiar with real-estate contracts.
For more real-estate guidance and advice, visit
RealEstateJournal.com, The Wall Street Journal Guide to Property, is the
Internet's premier site for people seeking real estate guidance for both
commercial and residential properties.
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