Real Estate Market to Media: Reports of My Demise are Greatly Exaggerated
It seems that everywhere you look lately, media have been searching for signs that the real estate market is in trouble, with stories of rising inventory, price declines, and seller incentives. Many of these reports miss the forest for the trees.
Current conditions underscore the fact that real estate markets are local. The media’s focus has been on regions that experienced record price appreciation in recent years, particularly on the East and West Coasts, but many areas of the country have seen slower, albeit steady, growth, and these markets are largely unaffected.
A more balanced relationship between buyers and sellers also allows more first-time buyers to enter the real estate market, helping build wealth and strengthen communities. Historically, housing has been and continues to be a good long-term investment. Since record keeping began in 1968, the national median home price has risen every year, even during recessions and periods of sales decline. Typically, in a balanced market, home values rise at the general rate of inflation plus 1.5 percentage points.
Demographic demand also favors housing over the long term. The echo boomers (the second largest generation in U.S. history, behind their baby boomer parents) are just entering the years in which people typically buy a first home. In addition, the boomers themselves remain in peak earnings years, there is a strong immigration impact, and minority homeownership rates have been trending up.
Yes, the double-digit appreciation for home prices in some markets may not be expected in the near future, but the market foundation is strong and the sky is definitely not falling.
Comments
Thanks for sharing that 'real estate markets are local'. So the NYC market doesn't have much in common with Taylor Nebraska? (roll eyes)
Here's some fun facts on market conditions for New Haven County, CT: Real Estate in the forclosure process is nearly at an all time high. Condo's and single family homes, even with price reductions of 10-25% have been sitting for months. 120 unit condo in New Haven suburb has sold a total of 4 units since completion over 3 months ago. ('Fun Facts' were garnered from: Realtor.com, Domainia.com, and my very own database which I've been using to accurately track local market conditons over the past two years.)
True that over the long term Real Estate is the way to go. For the short term, temporary collapse is inevitable.
Posted by: Gary | September 5, 2006 03:09 AM