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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (3587)	7/25/2002 8:37:56 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

Still, less expensive valuations have to come from something. Higher interest rates would work, but lower, not higher interest rates accompany a deflationary period. A shift in demand preference works as well, like during the early 1990's when people see home prices decline. Nothing like declining prices to sour demand for buying homes. But at the end of the day, nothing brings down home prices faster than the REO sales of homes whose owners could not continue to make their payments. Resulting lower valuations ripples through in a wave of additional defaults. Ultimately, lower income from investments and unemployment are the prime drivers of lower real estate valuations during deflations. Of course a good credit crisis helps as well.