How to Protect Yourself
If the Market Goes South
by Diane Hess
Special to The Wall Street Journal Online
August 26, 2005
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With the strong appreciation in home values and an array of risk-laden mortgage products available, debate continues about the direction of the U.S. housing market. New data from the Commerce Department showed record home sales in July, when economists expected a decline. On Tuesday, the Mortgage Bankers Association released a study noting some growing risk factors -- price volatility and speculative activity -- in the residental market.
What to Do: There are several things you can do to protect yourself from a potential downturn in the housing market. Review a ranking of metropolitan areas, in terms of the risks of future declines in house prices. Beware of speculation. If you decide to buy, see how much house you can afford, and check out this mortgage-shopping worksheet. Read about how to keep rising mortgage debt from derailing your retirement plans. See more articles on the changing market landscape.
Building Up
New houses sold and for sale (in thousands)
| Region | July 2005 | July 2004 | % Chg. |
| Northeast | 98 | 57 | 71.9% |
| Midwest | 205 | 222 | -7.7 |
| South | 612 | 497 | 23.1 |
| West | 495 | 328 | 50.9 |
| U.S. | 1,410 | 1,104 | 27.7 |
Note: July 2005 data are preliminary
Source: Commerce Department
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