Two years ago seems a lifetime away in the real estate industry. Or mortgage industry, title industry, finance industry, and just about every other sector of this economy of ours. Will the real estate market ever turn around to where it was two, three, five years ago?

The answer, of course, is yes. But that doesn't mean it will happen tomorrow, or next year, even. Here's a VERY brief and non-technical overview of what happened, and how it will eventually correct itself.

What happened was a combination of several factors, with origins in the Clinton Administration and continued exacerbation from the Bush Administration. The first problem was a federal initiative to make "everyone in America a homeowner," starting in the '90s. What happened was that Fannie Mae & Freddie Mac loosened their guidelines regarding who could get a loan, creating a market in the private sector to follow suit. Thus, the subprime mortgage industry blossomed.

Second, the Federal Reserve overheated the economy with artificially low interest rates, and then held them there for too long. We now have a multiplier effect: credit has now been extended to anyone who wants it (not only those who qualify for it), and has been made so cheap that a frenzy is created. The short version of this story is that there was a surge of homebuyers, many of them unqualified, which drove prices up. With values inflated and credit dirt cheap, existing homeowners maxed out their mortgage debt by refinancing.

The bottom line: real estate was artificially inflated, which set the market up for a fast reversal to correct itself.

So where do we go from here? Real estate values, like everything else that's dictated by market economics, respond to changes in supply and demand. Right now many of those new homeowners are losing their homes to foreclosure, and can't buy new houses, which both increases the supply and reduces the demand. Furthermore, many real estate investors have quit the business in search of greener pastures, also reducing demand. Both of these reactions contribute to the problem, and help create a downward spiral.

But guess what? The population of the United States is not only increasing, but faster than ever before. And people always need a place to live, so after regrouping by staying with friends/family or downgrading their homes (what we're experiencing now), they'll stabilize as tenants or homeowners in more affordable areas.

This means that now is a good time to buy rental properties, if you can afford it. Because in a few years, when the foreclosure mess dissipates, there will be a steady rise in demand from young families, and they're going to become the next wave of first-time home buyers.

Buy low, sell high, as your grandparents told you. If you have the stamina to wait it out and keep some properties as rental investments, there will be a lot of money to be made once the market starts it's upward climb.

If you don't have any experience as a landlord, here are a couple free resources:

Free Landlord Rental Forms - EZ Landlord Forms

Free Real Estate Comps - cyberhomes

Free Payment Calculator - HSH

Free Rental Listings - Craigslist

Being a landlord is not always easy, and remember that for all intents and purposes you'll be stuck with any properties you pick up for a few years, so consider carefully before taking that route. But for those patient enough, it's an excellent way to buy while the market's cold, and sell when it's hot.