cost vs. value ratio or fair market value.

Many housing markets that experienced huge appreciation were out of line with their true market values. There were gaps between housing prices and what that local economy could sustain based on projected or true job growth in many regions of the U.S.. These key value indicators were seriously out of alignment. This misalignment, in some instances, left a lot of room for prices to freefall or take large corrections in order to reach a cost vs. value ratio or fair market value.
In a normal functioning market housing demand supports market growth and keeps pace with emerging jobs. Typical appreciations in these areas were between 5% or 6%. Problems began to emerge when this appreciation soared in excess of 50% or 100% or more in a short period of time. At the same time taxes and insurance rose dramatically to keep pace with the rising prices in the marketplace. People were caught up in the ether and invested at previously unprecedented rates hoping to get rich quick. Jobs and other economic indicators did not support this appreciation.
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