Wall Street Journal columnist Cyril Moulle-Berteaux predicts the real estate slump will end in 2008, in his recent opinion column The Housing Crisis is Over.

He makes a very good argument for his opinion, reminding us that the current housing bust is now nearly 3 years old! 

Hard to believe, isn't it?  2005 saw the peak of it all, when we were getting 50 leads a day and realtors were little more than order-takers.  Here it is in mid 2008, and real estate agents everywhere have left their careers, many because they came on board when they didn't have to SELL, but do little more than answer the phone, reply to emails, and cherry-pick the leads.

According to the journalist, New Home sales are now down 63% from then, and new construction is less than 1/2 of what it was, back to the levels of 1982.

Mr. Moulle-Berteaux writes:

"The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.

Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.

Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in."

The author opines that in the past five major housing market crashes and corrections, when home sales bottomed, prices starting rising.  He says that in 1974, 1982, and 1991, total market inventory got to 11 months of supply, and within 6 months, price declines slowed.

He says that inventories will drop to 7 months of supply by the end of 2008, and although the magic number is 5 months (he predict by 2009) there will be a significant impact on the prices this year.

Also, mortgage rates are presently at 5.7% for a 30 year fixed rate.  In the 70's and 80's, it was in the teens - a big difference in payments and who can or cannot afford to buy.  With lower payment come less foreclosures.  Foreclosures lower market values which lowers prices, so everything working together will bring us back in the game.

Resort homes and condos in Myrtle Beach are traditionally more of an investor driven market, so may not follow the exact path of regular housing, but it's still a ray of light and hope in the horizon for Myrtle Beach real estate sales overall.

See our websites for the available Myrtle Beach MLS listings and find the best deals on Myrtle Beach condos for sale.  Coming soon, a new website for cheap oceanfront property on both coasts.

See our real estate blog for Canadians!