| Real estate prices have fallen across the United | | | | major financial development. H&R Block, the famous |
| States, and most rapidly in the location that were the | | | | tax accountant firm, took a loss of about $135 million |
| parts of the real estate bubble going up the most | | | | mostly from losses in their mortgage subsidiary. |
| rapidly in the last five years, such as Florida, Arizona, | | | | Option One Mortgage, and its sub-prime unit have |
| and the Boston, Mass. area. Still, some areas must be | | | | been taking a big hit. |
| better opportunities for new buyers. After all the | | | | Of course, if you just look at this from the |
| question remains, has the bubble gone down far | | | | standpoint of the real estate market, it doesn't seem |
| enough, or does it still have a lot more to go. In any | | | | that big a deal. Instead of panicking, there will just be |
| case, you have to live someplace, so you may be | | | | real estate brokers who go heavier into the |
| likely to buy a house or apartment somewhere | | | | foreclosure and distressed home market. It will seem |
| anyway. If you live in some areas, like much of | | | | to be a novelty to them to sell distressed homes, to |
| upstate New York, there may never have been | | | | try to buy them at the lowest prices and resell them |
| much of a real estate bubble to worry about in any | | | | quickly at higher prices. Over the last five years, the |
| case. | | | | foreclosure rate on homes was very low, because if |
| On the other hand, on the Jersey Shore, and in | | | | a homeowner fell behind in their mortgage, they |
| suburban New Jersey's Bergen and Passaic County, | | | | could either refinance the home at a higher price than |
| near New York City, a real estate bubble has | | | | they paid and get some quick cash out, or sell the |
| definitely been built. For example, on the Jersey | | | | home quickly at a higher price than their mortgage, |
| Shore (New Jersey), not far from New York City, | | | | but not anymore. |
| the foreclosure rate on homes is climbing in some | | | | If you look at reports of the involvement of the |
| fairly ritzy neighborhoods. The foreclosure rate has | | | | entire U.S. banking system in the financial bubble you |
| doubled both there, and in nearby Bergen and Passaic | | | | get a different story. Since the average bank has |
| counties. | | | | about 50 percent of its equity tied up home and |
| Some sub-prime mortgage lenders sound weak and | | | | commercial mortgages. A big hole in this equity could |
| some are actually closing up shop. This is becoming a | | | | really start the financial system going down. |