Over the course of the last decade we’ve all experienced what was practically an unprecedented boom in home prices. Nationwide, housing prices rose by around 35% (that’s adjusted for inflation). More importantly, even though those home price gains have been most evident to the owners of higher end homes, it’s obvious that the price among homes owned by lower-income families were inflated by the so-called housing-bubble.

You may have heard that the “bubble” has burst, and that the nation’s housing prices are dropping accordingly. Now, that’s true – but it’s not the whole story. Many economists claim, that unlike artificially inflated booms (read: the dot com bubble), the housing bubble was caused by elementary factors, ranging from rising family incomes, immigration driven demand, environmental regulations and restrictions on buildings and a new slate of more easily accessible mortgage formulas.

If you’re thinking buying a home and you’re on a budget, you’ll want to start paying attention to that theory because it has serious implications for your immediate future.

Why Should I Be Paying Attention to Real Estate Economists Again?

That’s almost a simple question. You see, if the current downturn in average realty market prices is what’s known as an “adjustment” or “correction” (meaning a temporary downturn during which the housing marketplace shakes out the artificial factors that are driving prices up) rather than a traditional “burst,” once this period of correction has run its course, home prices will begin to rise again—only at a more realistic pace.

In other words, if you’ll need to buy a home on a budget, this temporary real estate downturn is window onto easier access to homeownership that you’ll want to take advantage of.

The raw data alone seems to indicate that the far side of the housing bubble’s, much talked, about collapse may see lower-income home prices rise by as much as 20 or even 30%. That would mean, for example, that if you were to take advantage of one of the increasing buyer-friendly mortgage structures available because of that “so-called” collapse to buy a home today for between $125,000 to $135,000 in two or three years it could be worth $165,000 regardless of the bubble.

Not a fortune mind you, but for a family on a budget … $30.000 worth of home equity in three years or less is nothing to scoff at.

Ok, I Believe You. Now How Do I Buy a Home On My Meager Budget?

When it comes to the pieces of the American pie we all dream of, home ownership has always been high on the list. Unfortunately, that’s a part of the American dream that’s too often been dificult for low-income families to realize.

On the other hand, most low-income families, only face a barrier of perception. The prevailing myth goes something like this: To buy any home, you’ll need a good credit rating and enough in the way of cash savings to put down a substantial down payment – two things lower-income families don't tend to have. Most of us are wholly unaware of the wide variety of mortgage programs, from government sponsored assistance and the non-profit sector support to a spate of private sector initiatives, that can help us reach the dream that’s homeownership with little or no money down.

You may think otherwise, but increasingly, would-be homebuyers on a budget are being looked at as the key to turning many troubled urban neighborhoods around. And, their logic makes a lot of sense. Once you have an economic stake in your home, you’re more likely to maintain your home with pride and care over the long haul, especially by comparison to your upper-middle-class counterparts looking for a quick slash-n-burn real estate investment.

Further, you’re also thought of as more likely to be active in social issues affecting your neighborhood and in earning equity as a means of long-tern savings rather than as a short-term credit card. That’s right, these days not even the private sector wants you to rent or live in low income and or federal housing. They want you to take ownership of your surroundings and participate in your community.

That way, housing prices across the board will continue to rise. That their “scheming” will help you realize your dreams, well, that’s just a happy side effect.

For More Information:

You can call Fannie Mae at: 1-800-7FANNIE or visit their website at: www.fanniemae.com. They’ll be happy to send you their 124-page booklet entitled “Opening the Door to a Home of Your Own.” It answers questions and provides tips on such topics as mortgage qualifications, credit problems, lender eligibility criteria and what to do if your mortgage application is turned down.