First of all, I hope all of the readers of Moola Mania had a very Merry Christmas and Happy Holidays!

I’m sure as you are reading the title of this post almost all of you are saying “of course it is.” Obviously the information I am saying about the real estate market being in the doldrums is no breaking news. The question that I have, which is an important one for our economy, is at what point does the vicious cycle end?

Right now we are in an environment where there is huge amounts of inventory, no demand, and the value of homes is declining faster than it has in the last 40 years. Sounds pretty bleak huh? Well it truly is. There is no way to sugar coat what is going on in the housing market. There are very few buyers out there, and the buyers that are out there are in a wait and see mode because they strongly believe that the prices will get even cheaper the next month. After all, who are we to blame them because they want the best price?

There has been a lot of talk about what exactly will stimulate the real estate market and the credit market. One issue is, even those who want to buy a house are having a hard time getting a loan. There have been ideas tossed around regarding the government getting involved and providing tax breaks for buyers of homes or even buying some mortgages, but nothing has been set in stone yet. I understand that the government has to do something to help reward home buyers, but I hope the government doesn’t get too involved in this. In the end the largest reason we are in this real estate market bubble is that prices got way ahead of themselves and they are correcting, which is a healthy but very painful process. In the interim I think the government should go after the greedy schemers who put people in homes they knew they couldn’t afford and provide some incentives, but remember that simple supply and demand will eventually win out.