Growing deflation in home prices and the economic recession has wreaked havoc with the real estate market. The subprime crisis of 2007 followed by the mortgage meltdown of 2008 has created a record number of foreclosures and we have seen home prices drop in record numbers. The current real estate market is in flux, and while it attempts to reinvent itself, there are opportunities for savvy buyers who have their personal finances in order.

The record numbers of foreclosures and layoffs have created a surplus of affordable housing on today’s real estate market. With institutions that are holding these foreclosed homes are being forced to sell them below market value. They are taking whatever they can get, and often taking a loss in the process. While this may not be good news for the economy at large, but buyers who have financing lined up and have good credit ratings may be able to pick up their dream home for a price that is unbelievably affordable.

Real estate market analysts are forecasting a deflation in home prices by approximately 12.6% in 2009. While this may not be good news for sellers, it presents an opportunity for buyers who are looking to buy a new home and have the money and the financing to do it. The record deflationary rates cannot stand for long or the economy will experience a prolonged economic downturn that will have dire consequences for years to come.

For buyers looking to capitalize on the current distressed real estate market, it’s important that they get their financing in order before they go out house hunting. Banks are being overly cautious and many buyers can expect to put down a sizable down payment as well as have a credit score of over 750 in order to qualify for financing. It’s important to get financing in place while you are searching for your home on the market, and know what you can afford to purchase. There are a lot of opportunities out there to pick up real estate really cheap, so its best to have your personal finances in order before you start to shop around.

The housing crisis is very real and its impact is far reaching even beyond the real estate market. Coupled with record unemployment and major downturns in construction, retail and even television networks, we may be facing the worst recession in recent memory. The stimulus package that was recently passed, along with mortgage reform that is under consideration is designed to stave off the lingering effects of last fall’s meltdown and stabilize the markets. Ultimately what will help the economy is an improved real estate market with prices that are stabilized and foreclosures moving downwards. The current real estate market is seeing an average of 9,000 foreclosures per day. That is damaging the economy to the tune of $225,000 per home, since that is the average amount of the mortgage taken out for a home.

While the current real estate market is ravaged by this housing crisis, there is opportunity for people who feel they are ready to purchase a home and want to take advantage of the rock bottom prices that are currently out there. Real estate market experts are quick to point out that the sales of homes have improved marginally in this time period, which presents a little bit of hope, especially for potential homeowners who have a good amount of money to make a down payment and can qualify for financing.