The collapse of the real estate market has been one of the major highlights of this current recession. Homeowners and investors have seen the value homes fall through the floor. This has also been coupled with unprecedented high levels of foreclosures and weak consumer confidence. Analysts trying to place a dollar figure on the amount of losses have all agreed the financial losses nationwide could be in excess of $600 billion and counting. Although recognized as the genesis of the financial meltdown, subprime mortgagers are still bent on slapping on high adjustable interest rates on subprime borrowers who had purchased homes under the no down payment home purchase system.

Expanding Crisis

After the second quarter of 2009, we saw a new trend developing in the real estate market where the fangs of the recession started biting into the untouched territory of high end, second home and vacation home markets. These homes usually valued over a million dollars and were reserved for the rich were standing still without suitors. Locations such as Florida, California, Michigan and Nevada where there is usually a waiting list with real estate agents to purchase high-end houses were all showing increased rates of foreclosures and late mortgage payments even among the rich. This has led to many in the real estate business to concede that by the time this recession is over no one will be spared.

Lack of Confidence

Prior to the collapse of the housing market in the US, investment in subprime investments was hot commodity amongst traders. These subprime loans were being packaged and resold with A+ rating providing high returns for investors. When interest rates began to rise and the pressure was brought to bear on the subprime home owners, the bottom of the bucket fell out, investment houses began operating as “ponzy” schemes by taking the investments of smaller investors to pay the larger ones. This however was unsustainable and the entire system crashed. As a result, over 2.5 trillion dollars was eventually lost in the confusion that followed. Investors started selling blocks of bond at prices significantly less that market price as the bonds were downgraded from A+ to junk.
To prevent a total collapse of the mortgage bond market, the government had to provide financial support to the major players Fannie May and Freddie Mac.

Loss of Jobs

The real estate was one on the major employers of skilled laborers. These laborers ranged from carpenter, plumbers, electricians and engineers. The collapse of the real estate market literally put these individuals out of jobs as there was a cessation in new housing developments and current homeowners chose to suspend all home improvement until the financial condition improved.

New Opportunities

It is said that in everything there is opportunity. Some individuals have managed to benefit tremendously out of the collapse of the real estate market. Some individuals preferred to invest in modest investments that were unaffected in the recession. As a result, they were there to buy up many potentially valuable real estate properties at a small percentage of the original market value. These individuals stand to make significant profit when the market resurges. Other investors such as those in the home rental sector were also able to acquire property at knock down prices.