Answersa) When inventory ...

Tue, 06 Jan 2009 23:14:00 GMT

Answers

a) When inventory reaches a point that absorption from normal selling activity drops below 6 months. When foreclosures drop down to 5% or less of sales volume for the area. When household formation and income become positive factors in the area again. When unemployment drops back below 6% for your area.

b) Far more difficult. The actual average house price appreciation (measured over long time periods) is generally between 0.4 and 0.6% above the rate of inflation. Current TIPS pricing in the 10 year treasury market suggests that the market today is thinking that inflation will average just 0.16% over the next 10 years (the market is actually pricing deflation for the first 4 years of the 10 year time frame). Thus if reversion to the mean on appreciation occurrs it could well be more than 15 to 20 years before 2005 pricing is seen in your market. Given that there are tacked onto that 6% transaction costs to sell your house, it will take even longer to reach breakeven on a sold basis

Hope this helps

Kind Regards

Some have predicted as early ...

Tue, 06 Jan 2009 13:40:00 GMT

Some have predicted as early as 2010 while others have predicted as far out as 2014 before bottom is reached.

In a normal market, appreciation runs from 3-6 percent. What happened in the bubble was appreciation way above that, in some cases more than 20% per year.

So if values drop 10% per year for 3 years, the market gets back to normal it will take many more years at 5% to reach 2005 prices. In some places they are falling or have fallen by more than 30% already and will continue downward. You can see that prices will remain below 2005/2006 peak prices for many years. At least they should.

Zillow Advice: Investing - How long till Delray Beach FL housing market a)hits bottom and b) re-eclipses its 2005 peak?

Answersa) When inventory ...

Some have predicted as early ...