It’s official: The housing bubble has officially popped and the air is leaking out across the nation.  As people scramble to rid themselves of their properties before it gets even harder to sell, we are left to speculate what is going to happen to the rest of our nation’s economy.

            The housing market is such a huge part of our economy for a variety of reasons.  Interest rates, the job market and mortgages are all dependent upon the health of this market. As this influential market continues to slow, we need to be aware of the repercussions this could have on our economic well-being.

            An article by Barrie McKenna, posted on theglobeandmail.com, “The housing collapse heard round the world,” looks at the economic impact of the slowing market on the United State’s overall financial situation.

            “The once red-hot housing market has fizzled. And the topic du jour among economists, investors and policy makers is whether the end of the housing boom signals the beginning of the end of a long run for the world's mightiest economy, and by association, the rest of the planet.”

            “The U.S. housing crash may prove to be the economic equivalent of the canary in the coal mine — a warning of impending danger in an economy that has surged too far, too fast. Many experts are now openly speculating about a possible U.S. recession next year, brought on by consumers reacting to the shrinking value of their nest egg. If they're right, the fallout could prove to be far nastier than the collapse of the technology bubble at the start of the decade.”

            The housing market experienced tremendous growth during the boom of the past five years.  Builders constructed new homes and condos like there was no tomorrow, and the value of homes went through the roof.  Many new-buyers did anything in their power to jump on the “housing bandwagon,” but things look like they are really changing this time around.

            “Runaway real estate prices, which had been growing in double digits throughout much of the country, are now pricing potential homeowners right out of the market. The ability of Americans to afford a home is the worst it's been in two decades, according to the National Association of Realtors.”

            In stark contrast, the market is now flooded with a surplus of un-bought homes, with no buyers in sight. Although prices in most areas have yet to take the plunge, home price appreciation has slowed dramatically in comparison to last year.

            “The past year has been rough on consumers. First, mortgage rates began to rise. Then, there was the jolt from sharply higher energy prices. And now the apparent end of the long real estate boom is at hand. It's all combined to make Americans feeling distinctly poorer, and less confident. Mirroring other recent surveys, the U.S. Conference Board reported last week that its consumer confidence index suffered its biggest one-month drop in August since the devastation of hurricane Katrina a year ago.”

            No one knows exactly what impact the housing market is going to have on the economy, but chances are it is not going to be very good. We can only hope that the situation will slowly correct itself and things will not get too out of control.