Housing Crisis May Affect Consumers For Years To Come

In 2010, some homeowners continued to struggle with increasing mortgage loan payments, a trend that convinced a record number of Americans to attempt to refinance their properties.

However, consumers in some areas of the country may not see returns on these investments for many years, as some real estate markets that have been hit hard by the foreclosure epidemic could remain stagnant for years.

According to recent research by Moody's Analytics, cities in California, Arizona and Nevada may not see their home prices return to their pre-recession values until as far out as 2030. The study, which was sponsored by the Mortgage Banking Association's Research Institute for Housing in America, sought to outline the impact of the crisis by carefully studying its effects in more than 80 metropolitan areas.

"The housing crisis leads to a completely different list with declines that surpass the competition for the worst housing declines in the U.S. since 1980," the report said.

Some sample cities saw almost 75 percent drops in housing prices, after adjustment for inflation. Stockton, Modesto and Cape Coral, California, saw 75, 73 and 60 percent declines in values, respectively, and all three were among the metro areas with the largest drops from 2006 to 2009, the news source reports.

This breaks the longtime trend of these decreases occurring primarily in old manufacturing cities such as Buffalo, New York, and Cleveland, Ohio, according to The Wall Street Journal.

In addition, the report said some neighborhoods plagued by vacant and foreclosed properties could see home values keep deteriorating in the coming years, the news source said.

Ultimately, some consumers who were hoping to use their real estate investments as a means to retire may have to turn to other sources to augment their income.

Some will likely want to compare investment vehicles in order to find options that might allow for more monetary accumulation. Others may find that avoiding the high fees that have been added to some bank accounts in recent months may be a priority.

Another investment tip that could help consumers is looking into secured investments such as certificates of deposit and money market accounts. By diversifying their holdings, Americans could also ensure they are insulated from further collapses in specific financial sectors.

By saving money and investing it wisely, homeowners could help offset at least some of the potential loss they are likely to see on their home loans.

About the Author:
Ryan Fields is a personal finance journalist for e-wisdom.com who covers a range of finance topics, including current trends with bank accounts , credit cards , insurance rates, and mortgage loans.

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