In recent times, Americans have grown increasingly pessimistic about their national economy. They consider the condition of their economy to be as dismal as it was during the recession of the early 1990s.

Rising prices are clearly the uppermost concern. Nearly 49% of the people say that rising prices of essential commodities is the issues that concern them the most. In contrast, only 19% cite the unemployment situation and 12% cite declining real estate values. Inflation is the primary concern uniformly for people at all income levels, although the constantly declining real estate values affect strongly upper middle class Americans with household incomes of $100,000 or more.

The two major factors that have grossly affected the real estate markets are:
1. Easily available house loans that enabled borrowers who had poor credit to purchase homes which they otherwise could not have. These risky loans were then securitized and sold to investors.

2. When these less credit-worthy borrowers were not able to repay their loans, the lenders stopped the easy credit. Builders, who had already taken steps to meet the new demand, could not stop building new homes.

Richard Bitner, a 14-year veteran of the mortgage industry has stated in his recently published book how "greed, fraud, and ignorance" were involved in pushing home prices to absurdly high levels as well as getting borrowers to buy houses they simply could not afford.

Wild speculation by investors and high expectations of homebuyers of an attractive financial payoff made housing market more volatile than the other sectors. This factor caused people to buy a home less for personal use, but more as an investment to resell and generate a capital gain.

In the U.S. real estate prices have steadily gone upwards, year after year, at least during the last four decades. But home prices severely nosedived in the early 1990s and experienced a major boom in the mid2000s.

In the largest metropolitan areas across the nation, housing prices have slipped by about 15 percent during the current two-year slump - more in parts of Florida and California, less in some states, including Connecticut. Although the housing market slowdown is national phenomenon, yet it has taken its earliest toll in Midwestern communities. Some market forecasters say that coastal communities, from California to the Eastern seaboard, may ultimately witness the sharpest downturn in prices. Experts believe that the uncertainty is greatest in coastal areas and other hot markets such as Las Vegas, due to the unusual nature of their recent price surge.

The devastation taking place in the building and home construction markets is expected to continue till the end of the year, according to analysts who spoke at a recent conference sponsored by the National Association of Home Builders.

Quite a few leading economists opine that the deterioration of the housing market has caused the U.S. economy to slip into a recession that may continue at least till June. They feel the high oil prices will continue to hamper consumer spending and will make home financing difficult. A recovery in the housing sector may not happen until at least 2009.

Drastic decline in home prices has adversely affected the homeowners' wealth and some mortgage borrowers have found the value of their homes has fallen below the price of their mortgages. Many industry watchers predict that sooner than later, the housing crunch will cost Americans $400 billion in lost home value.