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Is The Real Estate Market A House Of Cards?

Is the Real Estate Market a House of Cards?

The upswing in housing prices may increase consumer spending by homeowners who believe increases in the prices of their homes has made them richer.

In 2005, prices for homes climbed to dizzying new heights. Does this trend in prices represent a bubble? Will the bubble burst? Are these higher prices sustainable? What will be the economic impact?

During 2005, the housing market has been a frequent news topic. Why all the interest? First, the price of housing, particularly in some "hot" areas of the country, has seen annual double digit growth over the last five years—up to 50 percent per year in Las Vegas! Second, the housing affordability index has been dropping. This index is a measurement of those who can qualify for a mortgage on a median priced house given current interest rates, a 20 percent down payment, and the median income in the area. For example, the average cost of a house in California as of November 2005 was......


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Approximate Word Count: 2160
Approximate Pages: 9 (250 words per double-spaced page)

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