a reminder of Japanese real estate

During the 80s, Japan's burgeoning economy led to a spectacular rise in real estate prices. This was shortly followed by a dramatic decline in prices. The problem that existed afterward was that many people were burdened with large loans on property with decreased value. In cities, families were living in small appartments because they have a large loan and can not sell their appartments for a substantial loss. This can happen here also. Already, appartment and condominium prices in cities have increased dramatically in the last decade due to low interest rates and other factors. House prices have increased in the surrounding suburbs and even rural areas of America have noticed house increases. Towns with a population of 30,000 have house prices unheard of ten years ago. As interest rates rise, house prices can drop since people are not willing to take on large loans with a high rate. This leaves previous buyers with a large loan and a loss in value of their property. For the economy as a whole, residents would be making payments on their homes and less money would be available for spending.