Towards a Sustainable Housing Market

Well, it seems that the "hot" markets are starting to cool down, and the "cool" markets are either keeping pace with their historic moderate rate of appreciation or going up marginally. The crazy real estate ride may just be winding down.

Did you know that typically your home will appreciate a couple of percentage points above the inflation rate? This makes your property a solid investment; while you won't make as much as with a risky stock, you aren't likely to lose your shirt either. Some analysts are now saying that the market is returning overall to this "normal" situation.

As could be expected, this means that overheated markets are slowing down. In fact, Florida, California and Arizona are cooling. In these states, the markets are seeing growing inventories of properties for sale, which inevitably means that prices fall. At the same time, in Texas, the Carolinas, Ohio, Utah and New Mexico markets are picking up steam. Overall, the differential between areas should even out somewhat, given the current trends. After all, with rising interest rates and falling affordability in many areas, something has to give.

Where does this leave us now? Well, some analysts are still watching the market carefully, given that an overcorrection in interest rates or a nasty impact to the economy could still knock us into a tailspin. But at this time, many are saying that we are in for a "soft landing", and that's good news.

Michael

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