The Weak Real Estate Market
(It’s going to rebound any day now.)
Well, the problem is, the real estate market can not rebound until it corrects itself, which may take a little longer then originally expected.
If you needed evidence that the housing market was at its weakest point in years, the Federal Reserve has complied with your demands.
The September 6, 2006 article, “Federal reserve banks report weak real estate market,” posted on Inman News, releases more information that supports the cemented theory that the U.S. real estate market is in a “cooling” phase.
As 2006 rolls along, the real estate market continues to struggle, while a buyer’s market is beginning to show signs of emergence.
“Most Federal Reserve Districts across the country reported declines in home sales and construction activity, ‘substantial increases in the inventory of unsold homes’ and a general expectation of continued weakness in the housing market, according to an informal review prepared by the Federal Reserve Bank of New York.”
This review, referred to as the Beige Book, is a compilation of comments from businesses submitted by the nation's Federal Reserve banks.
These banks are divided into 12 districts: Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond, San Francisco and St. Louis.
“‘Housing markets and home construction activity weakened throughout the nation, but commercial real estate and construction strengthened in most districts," according to this latest review, which includes information collected on or before Aug. 28.”
Several districts including: Philadelphia, Cleveland, Atlanta and Kansas City reported that their housing market was expected to continue to remain weak, or weaken even further.
Home prices had flattened out or were declining in New York, Richmond and Kansas City.
“The high-end real estate market was described as particularly weak in the Richmond, Chicago and Kansas City districts, according to the report, and in parts of the Minneapolis district. Meanwhile, the high-end real estate market in the Dallas area and the high-end co-op and condo market in the New York district ‘were reported to have experienced less softening than the more moderately priced segments.’”
As the housing market has weakened, rental markets have started to thrive. Chicago and New York are among the leading markets experiencing much higher than usual apartment rental demands.
Much like the rental market, office and commercial market have been improving as well.
“Commercial real estate markets were uniformly described as strong and, in most cases, increasingly so," while office markets improved in the Boston, New York, Philadelphia, Atlanta, Chicago, Minneapolis, Kansas City, Dallas and San Francisco districts, according to the report. Commercial real estate market conditions were described as mixed in the Richmond and St. Louis districts.”
The housing market is deteriorating while landlords are cashing in. If you are trying to sell a home, you may have to slash your asking price or offer other incentives. This “cooling” trend will last at least throughout the rest of the year.
