Much of the real-estate market in the 20th century was subject to boom and bust cycles that repeated themselves without anyone ever learning anything. This was evident in the case of both the boom-and bust cycles of the seventies, and the repeat cycle in the eighties.
However, the nineties were a change. The real estate market began to rise steadily and steadily. Credit became more affordable and Sedona Az Realtor easier to get, and the prices of many items dropped as globalization introduced negative equity. Many home owners chose to live the good life, and took out second or third mortgages to release equity in their homes.
It seemed that the 21st century would be a time to live life fully without worrying about market fluctuations. Money does not come from nothing. Borrowed money must be repaid. This seems to suggest that the party should end at some point and that someone has to pay the bill.
The cynics will argue that this is what is happening, with the current tightening of credit and an increase number of properties being foreclosed and being sold with their owners' credit rating severely damaged.
However, this isn't the whole story and it is not true. Yes, foreclosures continue to rise and are likely to increase for some time. The truth is that the housing market has been overheated is now in correction. House prices are not falling as the bust part is happening, but they stabilize in slower growth. This is more reflective of their true value and affordability for those who are looking to buy a home.
This is good news, despite how unlikely it may sound. Foreclosures allow homes that are stuck in the housing market at a artificially high price due to demand to be released and made affordable again for first-time buyers. Additionally, foreclosures create a dampening effect on other parts of the housing market. The market stops growing faster than the credit that is available to it because of the increased supply of affordable homes.
Don't get me wrong. While foreclosures are not good news for anyone, they do occur as part of the mortgage lender's activities and the real estate market. It is another market correction mechanism. Its impact should not be underestimated. We should also see them as a result of a market that has been stretched to its limits and is now returning to normal.