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Real Estate
Market Trends
by Jeanette Fisher
If the real estate market
is anything, it's cyclical. Any experienced
investor knows that the market goes up and down,
but the trend is always upward if you hold on long
enough. Only a first-degree optimist could have
believed that the frenzied pace of the past few
years could continue. It was unsustainable, and
everyone connected with the business knew that in
their heart-of-hearts.
That means the market trend will still be upward
beyond the downturn of 2007, but it also means
that many of the speculators who made fairly easy
money during the boom times of the last several
years will be shaken out. It's also proof that
America's supply-and-demand system works.
The rest of 2007 will continue to be slower than
most investors would like, and there are
forecasters who predict a similar situation
throughout 2008. However, the overall market is
expected to rebound in 2009, although no one is
predicting a return to the dizzying pace of the
recent past.
The places hardest hit by the return to a more
normal market situation were also the hottest
markets during the run-up: Southern California,
Las Vegas, and Florida, which have experienced the
largest declines in home prices in 2007. Texas,
which was also a hotbed of growth, has also shown
some significant price declines during that
period.
With the nation's home sales down overall, sales
of new homes have also begun to slow. In fact, the
National Association of Home Builders (NAHB)
predicts a drop of slightly more than 13%, which
would be the biggest drop since 1991 (15%).
There is good news buried among those figures,
however. With the decrease in new home
construction, the market will finally have a
chance to absorb many empty houses left over from
the boom times. After those homes have been sold,
the supply-and-demand cycle will again kick in,
shifting the emphasis back toward building new
homes to fill a growing demand from buyers.
Although the market won't regain its white-hot
status in the near future, there are some areas of
the country where real estate investors might be
able to profit relatively quickly when the market
begins to rebound. The strategy is to look for
areas that have seen home prices plummet, even
though then local economies are still stable,
vacancy rates are low, and price-to-income ratios
are reasonable. Such areas would include hard-hit
areas like Orlando, Las Vegas, and Phoenix.
Copyright © 2007 Jeanette J. Fisher
Use of this copy without permission (active links
required) is a violation of federal copyright
laws.
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