The outlook for the US economy and housing prices in particular does not look, hence the emergency 75bps rate cut. Despite this action, real estate prices still look set to decline in the near future - before they recover however there is some good news. If you want to protect yourself from declining real estate prices there are some ways of doing so and this is the subject of this article.

At present we are seeing the biggest investment in housing decline in 50 years and an increase in foreclosures and the outlook for real estate values is uncertain we are likely to see further declines will occur.

First let's look at the background to the fall in real estate prices in the USA and why they will continue to fall further.

The Worst Decline for 50 Years

US pending home sales fell by 2.6% to 87.6, down from a revised 89.9 reading for October. Boston Fed President Rosengren has stated that the current decline in investment decline is the longest in 50-years. He highlighted that previous housing declines have led to economic downturns, and speculated that housing prices would fall more rapidly this year as the economy struggles. Rosengren also said that the continued housing investment decline has heightened risk of "significant" downturn in the economy as a whole.

Foreclosures Rise

The evidence of the downturn can be seen in the increasing number of foreclosures - almost 500,000 mortgages nationwide were foreclosed in the third quarter of 2007, which was double the number in the same period for the previous year. Some real estate experts estimate that as many as 2 million homes could be foreclosed in 2007 and 2008.

The economy is experiencing difficulties in terms of growth and this is being reflected in falling real estate values as the credit crunch bites.

How to Protect Your Properties Value

In these uncertain times there are solutions available to protect the value of your property by Locking in its value at current market prices - so that you are guaranteed at least the value you locked your property value in at. Let's take a look at how these schemes work and the advantages they offer home owners.

Guaranteeing the Value of Your Home

Some companies are responding to the concerns surrounding the property market by offering an innovative option contract which provides you with a specific value for your property ( should you decide to sell) which can be exercised at your discretion after a period of two years and gives you protection for up to 10 years.

The advantage of this is - you will be able to sell your property at an agreed price, whether or not, there is a buyer for your property, as the company granting the option will buy it from you at the locked in value.

This of course gives property owners peace of mind - for a small affordable fee they have guaranteed the minimum price they will receive for their property, regardless of how far property prices decline. While the real estate market looks weak at the moment and further declines are expected, we don't know the future and prices will rise at some stage. An additional advantage the option provides is if the market should rise, then all the gains are yours.

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