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The media was hyping the burst of the "real estate bubble" for a few years before we saw the actual decline. Although all real estate markets go at their own pace, 2006 saw a general decline in property value and number of homes sold throughout the United States. Due to many indicators 2007 should see a stabilization of this decline.

In order to understand what will be in the future we need understand the past. With a few exceptions real estate value has been rising since the l950's. Since 2000 interests rates were falling rapidly, thus making financing easier. Combined with a generally strong economy (the 2001 "recession" notwithstanding) this created a real estate market where people felt they could buy.

In the Internet Age, property information, like everything else, is disseminated rapidly at the speed of, well, The Internet. This meant that as people sold their house slightly higher than the previous comparable house the next person knew about it that much faster. Before the Internet, with free online public records and online MLS's, it would take time for a general uptick, or down-tick, in the real estate market to disseminate to the surrounding houses and areas. Now, with instant access at our fingertips, this real estate information is gotten easily, and cheaply. It has changed the market to a very large extent on the up and down swings.

Certain illustrations:
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In this instant information age a volatile real estate market is inevitable. When the perception of a certain type of market (sellers' or buyers') is created and the underlying components are there (economy and interest rates) then a rapid growth, or decline, will happen. Changes always happened but, now, the changes have a very fast ripple effect across all aspects of the market.

That doesn't mean that there are only two ways to go, skyrocketing or plummeting. There is a middle ground, and this middle ground will happen quickly also. Obviously we can't tell the future but rapid property stabilization will probably occur in 2010.

The deflating of the "real estate bubble" occurred because of past rapid market growth and the fear of the market bursting. A lot of people declined to buy a home in 2006 because they thought that if they waited they would get a better deal. Sellers, who were accustomed to being in control, didn't see the property decline as permanent and many decided to wait it out. Many sellers put their move on hold rather than take a perceived loss. 2006 saw many expired and withdrawn real estate listings.


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As people who deferred buying a home for a while see that houses are not plummeting, like many predicted, they will start coming into the home buying market again. So the actual stabilization will also happen swiftly. This is, in a large part, due to the Internet. 2007 will probably not see a meteoric rise in the real estate market but it should see stabilization, with a slight uptick possible.

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