More price declines on the way
By Melissa Wirkus
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.