What you can expect from the residential real estate market

Prior to the late 1990s, home values have increased an average of 3 to 5% annually, keeping pace with inflation. Then the real estate boom came, caused by a variety of factors including the government pressuring banks to lend to low and medium-income families; banks lowering borrower qualification requirements; and the creation of mortgage-backed securities, derivatives and sub-prime lending.

Following the bust that started in 2007, real estate values in some parts of the country have dropped 30 to 50% and will continue to decline until they return to the values from 1998 to 2000, adjusted for inflation. Moving forward, real estate is likely to remain flat for many years to come as it returns to historical levels or, in other words, the market corrects itself. As baby boomers (those born 1946 to 1964) begin downsizing, there will be additional downward pressure on the residential real estate market. The good news? First-time homebuyers are in a good position. Qualifying homebuyers will find a good selection of homes right now at affordable prices and could receive tax credits for purchases made in 2009.

Where does this leave you? Call me to discuss your individual situation, and I can give you a better idea of your options. The first consultation is free, so you have nothing more to lose. Call me today.


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