Housing prices to drop?

This report from Moody’s is going to get a lot of mileage in the blogosphere and in the main media, in no small part due to the fact that it predicts negative housing prices. I have uploaded the pdf below for your perusal.

The closest-referenced MSA to us is Richmond. A brief state-wide analysis is at the Rebellion.

In short, properties in our market will most likely continue to appreciate, but at a more reasonable rate. There will be pockets of pain, which I will write about this weekend, but as a whole, our market remains good – different, but good.

The Charlottesville market is different and somewhat insulated, primarily thanks to the University and (for better or worse) much of the good press that our community receives. We are not that different from all other markets, but we seem to be much better off than Northern Virginia, from where we can usually draw significant correlations.

Moody's graphs

David Lereah, Chief Economist of the NAR, might have the most challenging job in the USA right now. How can you tell whether we have hit bottom unless we can definitively tell that we are on our way back up?

Pending home sales rise. The Pending home sales index reflects contracts written, not houses sold (by “sold,” I mean “closed”), so it is supposed to be a more up-to-date number.

Homeownership is up. And it costs a lot more than it used to.

Put simply, in my humble opinion, no one knows what the market is going to bring next year. We are clearly in a transitional market, but to what? Interest rates are still historically low. Inventory is higher than it has been in years. Patience is key. Buy a house to live in and enjoy, not to use it as a vehicle to get a home equity line so that you can take a vacation!

Further reading:
Econbrowser
Via Inman (sub required)

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2 Comments

  1. Todd Tarson October 6, 2006 at 11:58

    >Patience is key. Buy a house to live in and enjoy, not to use it as a vehicle to get a home equity line so that you can take a vacation!

    Yep, excellent advice… even though we are not in the finacial advising business. Personally I have not represented a buyer on a home that was looking to make big bucks, unless there were an investor. Two different buyers. Right now is a fine time for the buyer that wants a place to live.

  2. TrvlnMn October 6, 2006 at 16:39

    There will be pockets of pain, which I will write about this weekend,…

    I’m looking forward to reading about those. Depending on where they are there could still be opportunity for the right person (or not).