On the Sidelines?
According to a November 10th article on Realty Times, the market correction in housing is real. The Urban Land Institute assembled a group of panelists that believe the housing market will continue to correct itself through 2007. The condo market will have the biggest impact from the downturn, perhaps because this is one of the traditional "entry level" purchases. After 2007, we should start to see the market pick up again. However, as with all predictions, we'll only know for sure with 20/20 hindsight.
Meanwhile, the bloodletting continues for many. Foreclosures are still up. Those who purchased homes recently may be finding that they have negative equity in their properties -- in other words, their home is worth less than the mortgage. (I can sympathize. I've been in that boat back in the 90's.) In fact, those who have refinanced and taken equity out of their homes may also be in the same boat. This kind of news scares new buyers. It makes current sellers hold out for more money, even when the market isn't paying that. As a result, sales have slowed considerably in some regions.
It's making the view from the sidelines much better. After all, how many of us have been thinking that we've lost our chance to get into the market, as prices continued to climb unabated? I was doubting myself and our family's decision to hold off -- weren't we just going to end up paying more for the same thing?
Landlords are doing well in this market. While people avoid buying, they still have to live somewhere. As you might expect, once the buyers start entering the housing market again, the landlords may see a downturn as vacancy rates go up.
If people are staying put, perhaps it will be good news for renovations. Although we'll have to find another way to finance them, if we don't have equity in our homes to capitalize on. We certainly won't be pulling equity out of our home to get our (long-awaited) basement renovation. I personally would like to get the baby's crib out of our bedroom, and into her own room. But that means we have to get my home office out of the 4th bedroom and into the basement. While i love any excuse to use my power tools, we don't want to be living in the midst of drywall dust for any length of time, so my wife has insisted we hire someone. However, before we can do any of this, we'll just have to wait until we have the money. And in the meantime, life will be cozy in our little house.