Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

6 of 7
BACKNEXT
Housing
The underlying cause of the Great Recession was a bursting of the housing bubble back in 2007. Home prices plunged, sparking significant financial losses that shook the globe's major financial institutions as well as the wealth of individual Americans. That's why a pickup in home sales and rising housing prices are critical for an economic recovery.

Fortunately, sales have steadily improved throughout much of this year and it appears that home prices may have finally hit bottom. Yet, some argue that housing prices remain too high in relation to income, suggesting there is still room for prices to decline. A federal tax credit for buyers and lower mortgage rates may also be helping the market -- and neither is certain to continue.

There are also worries about a so-called shadow inventory of homes that have gone into foreclosure that have yet to hit the market. Once they do, that could put further downward pressure on prices. That's why many think the housing market is still in a fragile state. And if the improvement in housing proves to be short-lived, so will the broader economic recovery.

NEXT: Stocks

Last updated November 16 2009: 12:08 PM ET
Email | Print | Share  |  RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
More Galleries
'Spotlight' is just the latest edition of newspaper movies Here's a list of the best newspaper movies. More
Most valuable car collection ever auctioned In total, the 'Pinnacle Portfolio' is the most valuable group of cars from one collection ever sold in a single auction. More
This is how far robots have come since the 1930s Are robots catching up to humans? Yes. Should we be scared? Find out! More

Special Offer