Are homes going to get much cheaper? In a recent article at CNN Money.com entitled Homes about to get much cheaper, the author stated: If you thought home prices were bottoming out, you may be wrong. They’re expected to head a lot lower. The author goes on to say that the national median price is predicted to drop 11.3% next year and then rise the following year by 3.6%.
 
Now, here’s the thing. Average and/or median prices for any large geographic area are only an approximation at best, and very misleading at worst. Thus they are of little value to a prospective buyer for a specific neighborhood in a specific area. For instance, according to the article, LA prices are forecast to be down 20% by 2010. But if you check out certain specific areas such as Santa Monica, their prices are increasing today. So it’s important to research your specific area of interest carefully.

I think we can agree that all across the US, it’s all about employment rebounding. Until more people have jobs and a greater degree of security, the broad market will be down, with average prices continuing to fall. In some areas like Detroit, Cleveland and other Rust Belt cities, it may be a decade or longer for real estate to recover.

Fortunately we are in Palm Springs. We continue to draw a broad constituency of buyers, who move here largely for our wonderful sunny weather and warm temperatures. Still, it’s true that bargain prices can be found here now, with average prices in the Greater Palm Springs area generally at levels not seen since 2003.

So the take home message is that I expect to see average prices continue to be under some downward pressure but not universally across all pricing segments or in all communities. It is clear to me that as this economic downturn continues, more and more home owners will be having to sell at a loss. Many potential home buyers reading this kind of forecast are understandably concerned that they may be buying into a falling market and therefore leaving money on the table. To those buyers, I say – evaluate the specifics of the local market you are considering and, by all means, work with a knowledgeable Realtor well versed in the particulars of that local market. There is little question that prices in some areas of the country will continue to fall, but the question is – will they fall substantially in your area of interest?