First, subprime mortgages exploded and home prices crashed. Then, the financial markets fell apart. Will unemployment be the proverbial next shoe to drop on the already weakened U.S. housing markets? If so, the implications for real estate will be profound indeed. Historically, employment and home sales have been inextricably linked: People who had good jobs with steady paychecks bought homes while people whose income wasn't reliable weren't given home loans. Strong employment was a good indicator of future home sales while rising unemployment was an equally sure sign of fewer home sales on the horizon. The housing boom seemingly changed that paradigm as so many fundamentals of real estate were temporarily thrown out or turned upside-down. Stated-income loans, originally intended for people who had substantial assets but irregular income, meant that a job was no longer a prerequisite to buying a home. As the rate of homeownership accelerated and lenders became more aggre...
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