Lots of investors are biding their time and cautiously watching market trends, anticipating a potential crisis in real estate lending that will open the floodgates to bargain basement prices. The truth is, the crisis is already here and the market is responding. Homes are on the market longer and sellers are motivated to get out for fear of deeper losses. Will prices continue to trend down? I think they will continue to drop marginally in the coming months and then stabilize. I believe the stabilizing forces will stem from buyer interest in a sleepy market, tighter controls from the lending community and governmental relief in the form of subsidized foreclosure and refinancing assistance.
That said, I also expect more inventory to come on the market from re-sales and new construction. Since listings are aging faster than sales it is likely that sellers will need to be patient or price their properties more competitively. Buyers are at the advantage in this regard, since there is no great rush to seize a deal and can wait and watch for the right property at the right price. Keep in mind that waiting alone will not lead to a great find; it’s the watching that counts so keep an educated eye on new listings to keep pace with the dynamics of the marketplace.