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[H725]Housing Market Forecast 2009

by Mike Colpitts, Mik

The report comes on the heals of a Yale University economist warning to Congress that there may be future shocks to the nation's housing markets.

Economist Robert Shiller, who authored a book warning of the real estate market collapse four years ago told Congress he feared that ?the collapse of home prices might turn out to be the most severe since the Great Depression.?

?The decline in house prices stands to create future dislocations, like the credit crisis we have just seen,? he told the Senate's joint economic committee.

The present real estate slow down has evolved into a crisis with tightening credit standards for home buyers seeking mortgages. The slow down in the housing market is gaining momentum with slower sales in the majority of markets tracked by Housing Predictor, while foreclosures are at a record high.

Former Federal Reserve Chairman Alan Greenspan said he would not be surprised if home prices fall in double-digit decreases over the next year. Deflation in U.S. home prices of that scale nationally would be unprecedented in U.S. history, and would have severe economic repercussions, costing many times the economic damage of the subprime mortgage melt down that started the present financial crisis.

Investment bankers estimate the financial damage could be more than $300-billion. The damage to the entire U.S. economy would be the worst since the Great Depression.

The Housing Predictor analysis indicates inventory levels of homes, condos and land for sale in the majority of states markets are increasing with more foreclosures hitting the market.

Miami, Florida was selected as the #1 worst housing market in the nation, mainly because of a market that had seen high-flying double digit appreciation pushed by the over building of new condominiums causing Miami to spiral downward, resulting in a slower market with increasing unemployment.

More than 25,000 new condominiums are due to be completed within the next 15 months in Miami, providing an inventory of new units on the market that will take years to sell out.

Not all of the Miami market will see double digit depreciation in 2007, particularly not lower priced single family homes under $250,000. None the less, the average loss in values is forecast by Housing Predictor to hit 13.9% by years end.

In the west San Diego, California, which attracts many for its mild year round climate has a home market where sales are slow. San Diego will see prices fall an average of 13.5% in 2007 to take the second position on the Worst 25 Market list.

San Diego experienced some of the fastest and highest appreciation in the nation before hikes in mortgage rates at first slowed the market and then brought appreciation to an end. Higher end homes in the outskirts of La Jolla known for being a home to the rich and famous are now being sold for as much as 35% off their all-time high prices of nearly three years ago.

California's housing markets are showing signs of stabilizing in some areas, but it will take time for the markets to reach pricing levels where buyers are comfortable again in many parts of the state. California has more local housing markets on the Worst 25 list than any single other state with seven making the grade.

On the east coast, the state of Florida is only second to California with four housing markets making the list, including Tampa and Orlando. However, many markets in Florida have already stabilized and are experiencing growth in sales activity. Florida's markets slowed after a series of hurricanes hit the state in 2004 and 2005 only to pull out much earlier than many other areas of the country as a result.

Many of the nation's most densely populated urban centers are still experiencing weakened markets as a result of higher interest rates and five years of above average appreciation, many in the double digits. Real estate cycles typically run in 7 to 10 year cycles nationally with some exceptions. Only two years typically run at fever pitch appreciation levels.

New York, Massachusetts, Virginia, Colorado, Oregon, Michigan and New Jersey are among other states with markets listed on the Worst 25.

Las Vegas, Nevada, which had the hottest real estate market in the nation for two years running almost hitting 50% appreciation on average over one year alone dropped to a distant 17th on the list. Sin City has seen its market hit the brakes and then begin to coast back to return with a more active market due to its enormous growth over the last five years alone.

Article Source : Successful Real Estate Agent

Mike Colpitts has sinced written about articles on various topics from Real Estate, Computers and The Internet and Real Estate. Mike Colpitts is the Editor of Housing Predictor. To read the full story on the housing market recovery forecast, find your market's forecast and search real estate listings, including foreclosures visit. Mike Colpitts's top article generates over 8100 views. to your Favourites.