In US, the housing crisis still lies ahead, recent pullback in equity market might not last long!!!

One must not get mislead by the recent pullback across the global equity market, as long as US housing prices are falling, US economy is going to suffer so as the world around this is because of root cause behind this crisis is fall in housing so if you are looking for recovery, then look for the stablization of housing prices in US.

In reality, home prices don’t stop going down at some particular level that appears to be “cheap.” Nor do they stop falling because they match some historical price that was previously a low.
The end of the decline in home prices will come only when there are no new economic forces driving them down.

When will that be? I’d love to say it’s just around the corner. But everything I see tells me that, despite the sharp declines already recorded, a steeper plunge in home values is dead ahead.

The reason: So far, most of the troubles in the housing market have been caused by bad mortgages going sour. Meanwhile,

1. The more common causes of housing slumps — high interest rates, rising unemployment, and recession — are just starting to kick in. And …
2. The most powerful causes — depression and deflation — are still on the horizon.

In the boom leading up to the Great Depression of the 1930s, most Americans did not borrow money to buy a home. Variable rate mortgages didn’t exist. And Wall Street investors rarely got involved in the business of financing homes. Home prices did fall dramatically. But those price declines came mostly after the stock market crashed, after the economy shrunk and after millions of workers had lost their jobs.

The crux of the problem today: That phase of the housing crisis still lies ahead. Moreover, this time, because of massive debts, the pressure to abandon or sell homes is far greater.

Conclusion: If the U.S. sinks into a depression, home price declines could be as deep as, or deeper than, those of the Great Depression, especially in the hardest hit regions of the country.

It is a frightening thought. Yet, on the positive side, a sharply reduced price for the average home is the only fundamental, enduring mechanism for making homes more affordable and restoring demand — especially if the days of easy credit are gone.

Already, in 2008, one in ten American homeowners has defaulted on their mortgage or lost their home in foreclosure. Nearly four in ten owe more than their home is worth.

And all this is before the recession deepens and before we experience the next phase of the Great American Housing Nightmare.