House Prices to Keep Falling

Well, it looks like we haven't hit the end of the housing market decline -- at least that seems to be the case for many markets across the US. Here are the details on falling real estate prices from Money magazine:

"[National] inventory is 20 percent higher than last year, vacancy rates have soared and prices are down about 3 percent," he says. "Now, with the tightening of credit, I don't see how prices don't fall another 5, 6 or 7 percent."

The tightening of credit could take as many as one million buyers out of the market, says Baker, citing Bear Stearns research. "Even if you cut that in half, say to 400,000 or 500,000, that's huge."

All that has led Zandi to alter his projection of a 3 percent decline in housing prices this year to a mid-single digit decline. The hardest hit areas, which he thinks will be Arizona, Nevada, parts of California and Florida, will absorb high single digit or even double-digit punches.

A few thoughts on this:

1. The biggest sign that housing prices are falling in my area: I got my revised assessment for real estate taxes and the listed assessment value went DOWN. It wasn't by much, but it still went down. I've NEVER had that happen before.

2. I don't necessarily believe the whole doom-and-gloom articles. It will certainly be bad in some markets -- the ones that were very hot the past few years -- but overall I think it will be just as much "flat" as "down."

3. I'm still sticking to my real estate investment plan for the downturn. Nothing to report on it yet -- I'm still looking for a good to great deal. ;-)

Comments

[Casey Serin]

Maybe you will find some sweet deals like I did! Win-win!

[Onlooker]

As with any other "investment" (arguable for primary residence), one has to expect and prepare for some volatility. That means long-term planning, and buying a house on a budget.

We plan to sell our home within a year or slightly more, but we've seen a 79% increase in value over the last 6 years. So a softening of 5 or even 10% doesn't worry me.