More price declines on the way
As the market continues to slow, many potential homebuyers are wondering if now is a good time to buy.
Prices seem to be slowly dropping, so the question now remains as to whether or not the prices are going to decline even further.
But people who have been waiting on the sidelines preparing for prices to drop even more should prepare on continuing to wait since a new report was just released saying we should expect further declines in price well into 2007.
A new report from Moody’s Economy.com suggests that things are not looking to get better any time soon, and we could see declines continue throughout the next couple of years – yes you heard right, years instead of months.
An October 5, 2006 article by James R. Hagerty and Anjali Athavaley of The Wall Street Journal, “The shifting calculus of buying a house,” looks at this study as well as a couple of others that reflect our slowing market.
“Home buyers have another reason to sit on their hands. In the latest news from the slumping U.S. housing market, a report released this week says that median house prices are likely to decline more than 10% over the next few years in 20 metro areas, including Las Vegas, Tucson, Ariz., and Washington, D.C.”
“The study comes on the heels of a survey from the U.S. Census Bureau showing that 35% of American homeowners with mortgages last year spent 30% or more of their household income on housing costs, including loan payments, real-estate taxes, insurance and utilities. In 2003, a similar survey found that 30% of such homeowners were spending that much on housing. The new survey illustrates the strain on household budgets that has already helped slow house-price increases in some areas and push them modestly lower in others.”
So not only are housing costs up and taking a bigger chunk out of homeowner’s monthly income, but the value of a home is down as well. It seems as though the housing market just can’t catch a break.
This dreary news about the housing market is causing more and more potential homebuyers to hold off on their purchases more than ever, waiting for prices to fall further.
Pretty much every survey, report and study shows that prices are going to fall; they just seem to be in disagreement about what markets will be affected and how far they will fall. This could confuse many people who are debating on whether or not they should buy.
“No study, of course, can tell exactly how bad the market will get or when it will hit bottom. Even if accurate, a prediction for a metro area won't hold true for all neighborhoods or all types of housing. The good news, according to Economy.com's chief economist, Mark Zandi, is that the current downturn so far looks more like a correction than a crash on a national scale, slowing economic growth but not tipping the economy into a recession. The bad news is that falling prices could be very painful for some people who have bought homes near peak levels over the past year or so in such areas as California, Arizona, Nevada, Florida, Washington, D.C., and the coastal Northeast.”
Although the prices look as if they are going to drop further, it should be your own personal decision as to whether or not right now is a good time to buy a home. Besides, you never know what the market is going to do until it is too late.
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