The tax credit program that attempted to slow the decline of real estate prices was temporarily effective but merely put off the inevitable as prices ultimately move to their natural state given current economic conditions.
It's a pretty simple formula; if there's more supply than buyers, prices will fall.
And if there are less buyers because unemployment remains near 10%, the dampening effect on real estate prices will be huge. No matter what bureaucrats might think, the solution is not in giving away money or keeping rates low. These actions merely postpone the inevitable. Prices will drop until they are deemed to be affordable and reasonable.
Prices for real estate could easily drop another 10% which would put further pressure on the US economy. On the positive front, this is likely the last leg down for the real estate market. On a more sober note, it will likely take many years for the market to recover its losses and, in some locations, it may take a generation.
While some look at real estate as an investment, for most homeowners it's a place to live and in all likelihood most real estate transactions now will focus on the latter. Real estate investors have simply been burned too much.
Are there opportunities to invest in real estate properties?
Yes, but these investments are not for the light of heart as there is going to be a significant amount of time before these investments pay off. It's a time horizon issue as always when you make investments and real estate is back to being an investment with a long time horizon; so much for flipping properties to make a quick buck.