The housing market that was booming in 2004 and 2005 has now been cooling off for 15 months. Many home builders now say that we may be near the bottom of the slump and that home prices, and sales, should pick up slowly, over time. Some markets, including Bakersfield, are finally stabilizing and many experts expect home sales to improve starting with the first quarter of next year. There are many factors that play into the change in the market including mortgage rates and the economy.
Contributing to the change of direction the real estate market is suspected to take are low, and declining, interest rates, job growth, and low inflation. Although the second two reasons are questionable. These dynamic reasons are why talk of a turnaround early next year is just speculation.
This speculation does not mean, however, that home prices will jump, or even whimper, back to the rediculous double-digit home-price increases that we saw in the past couple years. Home prices will likely balance out over time and home price increases will remain flat for a couple years. The slump will weaken as fewer and fewer houses sit on the market, fueled by low interest rates and sellers’ incentives.