Real Estate Forecasts – What Do They Really Mean?
If you suffer from real estate blues brought on by plummeting prices, it may come as little comfort to know that this trend was supposed to have ended by now.
When the market began its downturn in early 2006, some of the smartest economists in the country, as well as the CEOs of major home-builders and the National Association of Realtors, predicted that prices would rebound by mid-2007. Instead the experts have been humbled by the depth and breadth of the downturn – and the resulting sub-prime credit crisis has shaken financial markets around the world.
So what do all of these real estate "forecasts" that keep hitting the news really mean anyway? Anything? Does anyone REALLY KNOW when this will all end and markets will rebound?
Record numbers of people are now finding themselves in foreclosure because they are either upside-down in their properties or have seriously overextended themselves. Banks and other lending institutions are scrambling to process the mountains of paperwork this creates, but also neglecting to take some responsibility in this mess. Most advisors are forecasting this housing slow down/stagnation and credit crunch to continue for at least the next couple of years. Amidst this sad news there are glimmers of hope and good deals for those savvy enough to purchase in this down marketplace.
The thing that gets lost in all of the bad news about real estate is, more than a dozen major metro areas are already ahead of the curve, and enjoying modest but significant price appreciation, while in some areas the inventory glut will take years to clear, even at heavily discounted prices.
By some estimates, the clampdown on easy credit provoked by the subprime crisis will ultimately wipe out 25% of national demand for housing, which in turn seems to be really good news for anyone holding rental property. Many "once upon a time homebuyers" now seem doomed to only rent for quite a while longer, not only because of tighter loan qualification standards now, but amassing a down payment is becoming more of a challange than ever before.
In summary, our advice is this: When you read about or hear about how bad the real estate market is, take the bad news with a grain of salt… because all is not gloom and doom in the real estate industry as many news stories would have you believe. But believe this: We have not seen a better time than now to buy real estate in MANY MANY years! And who knows exactly when or if there will ever be a better time again?
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