A. Market conditions always change. When supply exceeds demand, a “buyer’s market” results; when demand exceeds supply, a “seller’s market” results. Between 2002 and 2006, an unusually strong seller’s market caused real estate prices to increase to unprecedented levels. Now, market conditions have reversed course, with supply exceeding demand. In certain markets, the pricing increases gained during 2002 and 2006 have also reversed course, equally dramatically. Because we tend to compare market conditions to our most recent memories, the decrease in demand seems steeper when compared with the increases seen in the previous four years.
Certain markets may be struggling; others are rebounding; some are hot. Because real estate is a local commodity, certain properties or locations may be in high demand, even in a buyer’s market; local prices will reflect the balance between supply and demand at the neighborhood level.
People still believe their best chance at wealth is real estate. Consider these surveys from October 2008: “Zillow.com found that 61% believed the value of their home would either remain level or rise over the next six months. Another survey of more than 1,000 homeowners, sponsored by real-estate-services firm Realogy Corp., found that 91% thought that owning a home was the best long-term investment they could make. And an on-line survey of 5,000 people commissioned by Citigroup found that just 32% believed it was a good time to invest in stocks- but 51% said it was a good time to buy a home.” (The Wall Street Journal, 12/2/08, The Future of Home Prices by James R. Haggerty.)
If you have a real estate question you would like answered, please email Mary Bryan Fields via firstname.lastname@example.org. Mary Bryan has more than 35-years of experience in the Real Estate Industry and a Masters Degree in Real Estate from the University of Georgia. Additionally, Mary Bryan is a licensed real estate instructor in the state of Georgia.
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