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What is causing the housing market to go down?

I know this is stupid but what is causing the housing market to slump over the past months (or even years)? I see it on the news often. I'm not very knowledgeable in finance or the economy. I was planning in the future to buy a condo and is it worth it to buy one? A lot of people always say, "What's the point? Just buy a house."

Public Comments

1. If you can afford to buy do. Buying a house for a long term investment is worth it. Just make sure that the minimun payments are not more than 30%-35% of your income so you can cope with the changing interest rates. And make sure you have a loan that you are paying off the interest and the principle at the same time. In the US alot of ppl are getting catch out because of the type of loan they have. Because the interest rates are low in the US now it can be a good time to buy, but make sure that you can afford the loan if rates change. Consider a fixed rate for 5 years or so, so you know how much you have to pay. Good luck.
2. In the past few years, investors were buying properties to make money. This caused a shortage of available houses. These properties were usually rented out. The value of houses in the US rose dramatically to more than they were actually worth. The prices of houses became ridiculous. Investors realised this and began to unload their homes to take the profits. Values began to fall. At the same time the government was pushing lenders to finance people to buy homes they couldn't afford with little money down. These people were given adjustable rate mortgages, which were low, to get them started. As their rates rose, they couldn't afford the payments causing them to default on their loans. Many houses came on the market for sale driving prices down even more. Once prices started to drop dramatically, there were many people who owed more money on their house than it was worth. Many of these people just walked away from their house causing even more houses to come on the market for sale. Banks and other lending companies are now in trouble because of all of these defaulted loans. Now is not a good time to buy or sell a house because prices are still falling. Sorry to be so long winded but its complicated.
3. The easy answer is that supply is much greater than demand. That makes prices drop. Advantages to having a condo and not a house include no exterior work like mowing the lawn plus you get access to nice things like pools, tennis courts, golf courses, exercise rooms and club houses. Condos are usually cheaper to get into than houses. You can search properties in your area by Googling MLS and the name of your town and state or the name of a large, local realtor.
4. Lots of contributing factors have helped the housing market decline, and everyone has their opinion as to what the major contributor is. So I guess it depends on who you choose to listen to as to the main reason for the decline. Regarding buying a property: it very well may be a good time to buy. Lots of investors (who have the available cash) are buying real estate right now...buy low, sell high, right? And who really knows when the absolute "bottom" will be. Hopefully, we're there, or very close. Prices are definitely way down, and although getting a loan is more difficult right now, sellers will be more willing to work with you. Condo vs. house? Hmmmm...that's all up to your preferences. Personally, I've had too many nightmares with HOAs and so buy houses now. Yes, there is more maintenance with a house, but I get to decide what color drapes to hang in my windows (let alone paint the house), can hang a blanket outside to dry, can have pets, park where I want to on my property, etc. without worrying about getting fined. So it's up to you, do you define value by how much work you will (or won't) have to do on the property, or is it with the ability to do what you want with/on the property? My suggestion is twofold: A) get preapproved with a lender. Among other benefits, it offers you an exact monthly housing payment by which you can decide if buying in this price range is right for you. B) If you are going to buy a property with a HOA, read the rules and bylaws. Don't just ignore them thinking they are all the same. They're not, and when you buy, you agree to abide by all rules/regulations the HOA sets out.
5. prices are too high. they were pushed to unaffordable levels by low rates, flippers, investors, and crazy loans (subprime, alt-a, neg-am, interest only, option arm). prices are now higher then anyone can afford and will keep falling and falling until average families can afford the average home! when real estate agents refer to a bad market, they are talking about a lack or transactions / sales (they get paid by the sale). there reason there are so few sales, the "market is bad", ie low sales, is that there is a disconnect between what sellers are asking for houses and what buyers are able to pay. this is because few sellers NEED to sell so they hold on to their asking prices and buyers can not afford to pay any more because of a weakening economy and the lack of the previouly mentioned crazy loan products.