Just like a ride at an amusement park that slows down right before plunging to the steepest decline in the ride, our real estate market may be headed for a similar sudden decline following a small recovery of its 2008 declines.

With a drop of 10-15% anticipated, the coming price drop has been pushed by a combination of federal factors that are combining for the perfect storm in real estate.

Three years after the peak of the real estate boom and the news is still buzzing with real estate news. Chicken Little Syndrome initiated the bust and has continued its decline, even though we did have 7% appreciate across the nation this year

Increasing its loan standards may seem counter intuitive to anyone who is familiar with the function of the FHA, and the changes it is proposing will make getting a home loan a little harder.

Due to the inundation of foreclosures, the FHA reduced the number of qualified buys by forcing those with the weakest credit to pay higher payments for mortgage insurance, increasing the required down payment and limiting seller contributed closing costs.

Conventional loan programs are having a hard time placing loans with qualified borrowers, who are turning to FHA financing for easier loans.

For a lot of people the FHA was their only resort, said economist Dean Baker, co-director of the Washington, D.C.-based Center for Economic Policy. With conventional loan sources completing fewer and fewer loans on a daily basis, the necessity for FHA loan programs is increasingly supporting and boosting our real estate market and our economy in general.

The main catalyst in the national real estate market always has been, and still is, financing. As more lenders open up the credit spigots and make loans to qualified buyers, our market will stabilize and real estate will be a safe investment for homeowners again.

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