It is simple physics folks.  No need to panic.  Since the 1880 Real Estate has been tracked and charted. While it is true, that the American Economy heavily weights it economic health on the well being of the Real Estate Market, and experts are now suggesting that the next growth cycle will be delayed until 2009.  It is not a question of whether the Real Estate merket WILL recover it is now only a question of WHEN.

The HISTORY OF HOME VALUE IS VERY REVEALING

Source: "irrational Exuberance" 2nd edition By Robert J. Shiller

According to Robert J. Shiller, Yale economist who created this index of American housing prices dating back to 1980 and adjusted to today's dollars-this chart reflect exisiting home sales. Excluding new construction.

Of particular interest is the reduction in home prices as mass production techniques appeared in the 1920's.

A home purchased in 1890 for $100,000 saw a decline in value over time to $66,000 or 34%.  Is that not comparable to the decline in Orlando condo sales from 2005-2007?  Between 1929-1940, America experienced the Great Depression.  There were gains, with only a minor  dip in 1932 which resulted in  progressive gains in 1940. In 1942 a sharp rise is noted (post war) when a housing boom occured and the return of World War Two Veterans. A 41% gain in value was recorded. 

For the following five and half decades prices remained relatively stable a mild boom in the 1970's followed by a mild boom in the 1980's.  There was a notable decline from 1989 to 1997 approximately 20%.  Coinciding with technology stock crash.  From 1997-2007 the spike peaked to historic highs.  It would therefore not be unrealistic for the adjustment to be equally radical. 

IS GROWTH POSSIBLE IN HARD TIMES?

With record numbers of foreclosures mimicing the dips recorded following WWI, this historic review would indicate that the market will stabilize over time. There is noted growth during the depression. 

Modern economists attributed the tightenig credit standards to the decline in homes sale. "The credit freeze in August definitely impacted sales in September, particularly [for larger loans], so we have seen a large sales decline in the upper end of the market," said Lawrence Yun, an economist at the NAR.

 "There is some feeling that we will not know the true state of housing trends until early next year, but that the immediate shock coming off the financial sector crisis has been about as dire as many feared."  said Alan Ruskin, an RBS, analyst.

INTERESTING OPPORTUNITIES

For consumers looking to achieve long term gains, the housing market in its present condition presents some interesting opportunities.  Executive homes purchased now at historic lows will over time yield significant returns for the buyers who hold them. 

DISPOSABLE HOUSING ...HAS GONE THE WAY OF DISCO

Flopped Flips.  That ship has sailed.   The turn over rate has slowed sufficiently enough to give would be  homeowners a solid opportunity to purchase long term housing.  Furthermore homes that were previously "out of reach" have now been reduced significantly allowing consumers to purchase "more house for less money".   

In St. Cloud for example, there are many such oppportunities available.  Newer communities are attractive to buyers from out of state who can compare what their dollars will purchase in their home states to what they can purchase in Osceola County.

Maryland, New Jersey, Connectivut and most of all in New York, the cost of housing far exceeds their Osceola County equivalents.  An Executive 4 bedroom two bath homes in those regions commands a much heftier price tag than it does here.  Add to that the devaluation of the AMerican dollar against the Euro, Brittish Pound and now the Canadian Dollar, and Florida has some attractive values once again comapred to other metro areas.

BE REALISTIC

Purchases made in the past 2-4 years are not likely to yield a profit for the homeseller. This in part is due to tighter mortgage lending requirements, restriction, and available mortgage money. The second reason is, if a homeowner simply paid too much, they cannot reasonable expect to recover their losses in a competitive market.  Supply and demand. 

Market prices are dictated by what a consumer is willing to pay.  The longer a home is for sale is an indicator that the asking price could be chasing the market, rather than being on top of the market conditions.  Home sellers who have unrealisitic expectations of the true market value of their homes are less likely to achieve a sale in a reasonable period of time.   With so many homes for sale, the competition is extremely tough.

BUYERS ARE BUYING

The need for housing will always exist. Buyers are being much more selective. They have more choices available to them.  The homes offering the most upgrades, that are competively priced, will attract buyers. The best values will achieve sales.   Pricing in this economy, is a key factor which will decide if a home is for sale or sold.