Real Estate: The Big Question

How Low Can It Go?

Stock market technicians watch charts and volume to predict market turns. But just as the Dow has traded differently from the Nasdaq, some sectors of the real estate market have moved to greater extremes. As in the Nasdaq, with speculators in the market in places like Las Vegas, California and Florida, the price swings should be wider.

And you have to wonder if all the bad news is already figured into this real estate market. After all, these are relatively good times: unemployment is low, interest rates remain low and the economy is still strong.

Yet in the coming months, an estimated $1 trillion in adjustable-rate mortgages will be reset. Even at current low rates, monthly payments will jump for those who entered the market with low "teaser" rates. And those who have an "interest only" mortgage could see their monthly payments rise by 50%.

Even if the economy holds course, those mortgage resets could force a lot of people to sell their homes -- or default on their payments.

In fact, the foreclosure rate has been rising sharply in many areas of the U.S. It's been predicted that more than 1.2 million homeowners could face foreclosure this year. When you see television news stories about middle-class families being evicted, you'll know this trend has peaked.

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