The New Math

A “new” solution to the "gloom and doom" scenarios is on the horizon, and it's called "cause and effect." Just as home prices have fallen in many markets, buyers are responding strongly to the stimulus.

Like today's stock market provides excellent opportunities for investors in it "for the long haul," so too does today's real estate climate appeal to buyers with long-term expectations. And, the more buyers take advantage of current conditions, the more prices will eventually begin rising again.

That is due to a number of reasons, one being the subsequent drop in inventories, and another being the rising cost of new construction. So, those markets where home prices have dropped the most are experiencing a rise in the level of home sales taking place.

Areas where buyers are entering the fray again are well poised for recovery, and it's possible that the prices are finally bottoming out. The recently enacted housing stimulus bill is helping too, as over two million first-time buyers are predicted to take advantage of the new tax credit.

In 2009, those markets with affordable housing combined with healthy local economies will continue to see growth. Cause and effect is already in action, and you should be, too. Consult with a financial advisor and a local real estate agent to get the best results from this new but age-old formula.