No Magical Answers

Even Wizards of Real Estate Hesitate to Predict 2006

Q: If real estate prices keep climbing, I'll be priced out of the market. Should I buy now?

Are real estate prices tanking? Should I sell my investment condo now?

What's going to happen to home prices in MY neighborhood?

Oh, to have an accurate crystal ball.

Real estate became an obsession among area residents in 2005 as prices seemed to move out of the reach of ordinary people. But now people who watched the market go up, up, up are wondering if it could go down, down, down. And not even the wizards of real estate forecasting know the answer.

In the Washington area, the cost of the median-priced home -- the point at which half the houses cost more and half cost less -- climbed to $429,200 by mid-year 2005 from $243,300 in 2002, a 76 percent increase, according to the area's multiple listing service. In the first half of 2005, prices appeared to be swirling almost out of control, as eager buyers bid up the prices, waived their rights to home inspections and even penned pathetic little notes pitching themselves as the most attractive purchasers to picky sellers who acted more like they were giving a child up for adoption than conducting a real estate transaction.

Nationwide, more homes have been built in 2005 -- more than 1.2 million -- than were built in any year since the federal government began counting 40 years ago. Although complete annual figures have not yet been tabulated, homes are expected to have sold for record-high prices. The construction boom was a shot in the arm for the nation's economy, as new homeowners bought furniture, decorated and landscaped their abodes.

But the surge in prices had uncomfortable side effects for renters, home buyers and homeowners. Renters worried that delaying a purchase meant being priced out of the market forever. Those who took the plunge sometimes were compelled to turn to weird new mortgages to find toeholds in the market. And homeowners found themselves considering cashing in the old family homestead lest one day their children view them as foolish money managers.

Then, in the second half of the year, a slowdown set in. Homes began selling more slowly and prices appeared to be dipping slightly, leaving buyers and sellers agonizing about whether they had jumped too fast or waited too long.

Wrestling with such potentially life-changing decisions, people turned to experts for guidance.

But it's hard to find a good soothsayer these days. The Oracle at Delphi has been out of business for centuries; visitors these days find themselves standing on a mountainside amid a picturesque pile of rubble, gazing out over a landscape of ruined temples.

It's not as if she did such a good job in the first place. "The prophetess always phrased her verdict to be subject to interpretation, to be an enigma," said Achilles Paparsenos, a spokesman for the Greek Embassy in Washington. "Those who sought the advice of the oracle would find the answer unclear."