Tuesday, April 26, 2011

The never ending real estate free-fall

Today's statistics indicated that home prices in 20 American cities decreased by 3.3% from a year ago. As the market continues its free-fall, investors and would-be home buyer are standing by the sidelines watching and knowing that this might not be over yet. At the same time though, cost of new construction remains very high, creating a huge gap between new and existing dwellings.

This would suggest that older homes are already at bargain-basement prices, but conventional wisdom indicates that the market is waiting to reach an even lower “bottom” before it decides to jump and grab some great deals. The obvious question is, how further down can that bottom be? Of course, like for the stock market, no one knows for sure and wants to catch a falling knife. My sense tells me that it's still one full year away, namely in the spring-summer of 2012. We'll see...

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