There is a misconception about the real estate industry today and the ones who get it right are going to be the biggest winners.  We are in a credit crunch and finding the money that was previously available to purchase property is not available.  Is it because everyone has suddenly decided to let their home be foreclosed like you might hear on the news?  Is it because buyers are not qualified and we will go through an extended period until they are?  No, the answers lie with the banks.  They are required to keep a certain amount of their assets liquid and in reserve.  Since the mortgages are part of the asset base, the banks could always look at the value of the mortgages and determine the amount they needed for reserve.  But with the banks creating off balance sheet investment vehicles-which did have many mortgage back securities in them, banks are feeling the pitch and are not as lenient with money as they once were.  Investors of the securities are not buying them at the same terms and the banks are caught in the squeeze.  It is the same as the public having to pay higher rates and fees for the same credit card that they have been using for years- Now you have the debt and can't refinance it at better terms.   Of course there are bad loans and bad people.  That has always been the case. 

So where do we go from here.   In short, when the banks feel that they know the value of the loans that are currently in the system based on traditional methods, they can determine the reserves required by the government.  Investors will then jump back in the market and provide liquidity to the banks to make loans.  At this point, the loans will be properly securitized.   Make no mistake about it,  banks make money by loaning money.  If they stop, they go out of business.  The loans of yesterday will come roaring back(maybe with more strict underwriting) and banks will make money on them..  The only thing you can be sure of is the banking industries level of greed. 

As to why to jump in now, most people who are trying to sale a home today have seen great gains over the past few years.  But buying a home that is 10-20% or more below the reasonable market price can  create better returns than sitting on your current one.  The cost of new construction has not changed, commodity prices are going through the roof.  So when the excess  inventory is accounted for, people will have to pay for the additional costs to produce the home, finance the home and maintain the home,  This will increase prices, regardless of the economic situation today.. We will then be pulling out of a recession with corporate profits soaring.  Getting into the market when it is down only has risk if the market continues to drop.  Since the potential of a drop will be less than what has already occured, you would be buying at a pretty safe level. 

For those that would like to put in a question or two, or just respond with their opinion, let's get started!