When Will the Housing Bust Be Over? Not Soon

Here's an MSNBC response to a reader's question on when housing prices will stop falling. They start by covering the fact that no one knows, but then they at least take a shot at it and give a prediction. After citing all the facts, MSNBC comes to this conclusion:

Each local housing market is different, and each transaction is unique. But there’s ample evidence that many sellers haven’t yet cut prices enough to attract buyers. The most telling sign is the level of unsold homes on the market, which as of July was more than double what is was when the market was roaring ahead.

That backlog is probably one of the best indicators of a market turnaround: As that number comes down, it’s a sign that prices have reached a point where buyers are coming back into the market in big enough numbers to clear the unsold inventory.

But that may take some time. One big reason is that many would-be sellers are sitting out the slump and waiting for a turnaround. If they see signs of the market stabilizing and list their homes all at once, the backlog of unsold homes could shoot up again — putting more pressure on prices.

No one can say how long this will take to play out. During the last two major housing slumps — in the early 1980s and the early 1990s — it took several years before prices and sales recovered. Earlier this year, some housing market watchers had been looking for an upturn by the middle of next year. But after the recent turmoil in the mortgage market and monthly data showing foreclosures still rising, some of those forecasts have been pushed back to a recovery in 2009.

So, maybe now isn't the best time to buy, huh? We're not really in any sort of hurry though, and at this point I think we'd have to see something closer to perfect before we jumped in to buy. I'm guessing we won't find a new place this year but will hit it hard next spring and will find something before the summer is over. Sounds as if prices may even be better then than they are now but, of course, 1) no one knows and 2) every market is different. Don't you just love real estate? :-)

Comments

[Rhea]

To my mind, there is no doubt that most markets in the US are in turmoil. Prices will only get better for buyers. It makes sense to wait!!

[Ryan]

With a 9 to 10 month inventory of houses, it's going to take a loooong time to get down to normal 2 to 3 months of inventory. At best, we can decrease our inventory by 2 months every year.

[Kevin]

We're waiting another 6 months and then looking more seriously. By then we will have our 2nd car paid off and have more saved for the down payment.

Not to mention there is one house near us we've been watching. It started at $275,000 and is now down to $215,000 list. I told the wife if it doesn't sell by the end of winter, we should offer $180k and see what happens.