According to a recent article published in the Los Angeles Times, real estate prices are expected to drop across the board in California . In 2008, the California Association of Realtors forecasts that the median price of existing homes will decline 4 per year. The glory days seem to be over as the market readjusts to general softness in home sales. Even though home sales experienced a downturn of around 23 to a record of $576,000. It comes down to another fundamental lesson in supply and demand. The housing market simply is not immune to general principles of economics, as the supply of new and existing homes in California as of August 2007 reached a surplus level where it require around 12 months to exhaust the supply (assuming no additional houses came on the market). The effects of this surplus are beginning to directly impact home prices to the chagrin of sellers. With so many houses on the market it is more and more difficult for sellers to find a buyer.

What does this mean to potential buyers? Potential buyers should look for a decent deal if they are looking to buy a home at this time. Additionally, if a buyer is thinking of buying a house now and reselling in a year or two they might reconsider. While prices might be up in 5 or 10 years it will probably be difficult to sell for a profit in a year or so. What does this mean for sellers. First off there are a lot of homes on the market so it’s a good idea to make sure your home is presentable. Also now is not the time to play hard ball with buyers. I have seen sellers lose a deal by quibbling over the closing date and other such issues. While at the height of the market sellers could be safe in knowing that another buyer would come along shortly. But now sellers should remember there are a lot of houses on the market so a buyer has other options and it might be some time before another contract comes along.