This era has its own distinct problems as inflation and interest rates do not present challenges. Bankers are acting just as stupid today about not providing loans as they were two years ago about giving anyone a loan who good be propped up like the guy in Weekend at Bernie's. This will pass and normalcy will come back to the market.
Let's focus on the positive. You would think the housing market was still a catastrophe. In some ways it continues to be. On the other hand, the inventory of homes available for sale has gone from 13.4 months at the end of 2007 to 5.6 months in December 2008. That could have occurred because people pulled their homes off the market. But add in the foreclosures happening regularly and the inventory numbers do not look so bad. In addition, the fact that it took on average 46.1 days to sell a home in December 2008 versus 66.7 days a year earlier and you can clearly see a turn-around in the market. Real buyers are soaking up the buying opportunities. This will lead to stepped-up demand more people being able to sell their homes, price stabilization, new housing permits and more construction.
Call me Pollyannaish, but I lived through times like this before. We will survive as long as our government does not do too many stupid things. I am confident this economy will bounce back soon. Unfortunately, some of our fellow Americans will suffer and be dislocated, but we will come through these times stronger, smarter, and better for it. Hopefully, the next upturn will be even longer than the 25 years we recently lived through. More importantly, if you have to work a few extra years because of the equity you have lost so be it, you still live in the greatest country on Earth and be thankful for it.