Housing Experts See Further Price Declines in 2008
Sunday, September 30, 2007
In an industry with more question marks than answers, housing experts are predicting a continuing drop in single-family-house prices in the Washington area through this year and well into 2008, a bigger drop in condominium prices, and slight rises in prices of homes in certain neighborhoods.
"In general, for the metro area, there will be modest declines," said David F. Seiders, an economist with the National Association of Home Builders. "But it depends on the exact locality."
Peter Morici, an economist at the University of Maryland, said that with that in mind, "buyers should not feel any sense of urgency to buy a home."
"Sellers would do well to sit tight if they don't have to sell," he said. "Postponing to next spring or summer might pay. Between now and then, it's going to be hard to unload houses."
The downbeat local forecast comes at a time of gloomier news nationally -- sales are slow, foreclosures are rising, and difficulties in the mortgage market have prompted speculation that a weak housing sector could weigh down the overall economy.
"It is in our forecast that we have prices dropping at least through 2008 and then picking up sometime in 2009," said Patrick Newport, an economist with Global Insight, an economic forecasting company in Waltham, Mass. "The median price of an existing home in 2008 will drop about 10 percent. For new homes, we have prices dropping about 7 percent."
Guy Cecala of Inside Mortgage Finance, a trade publisher, said he expects similar trends in the Washington area. Unlike some commentators, he sees little hope of almost any home-price appreciation in the next year, even in hot Zip codes.
"We still haven't seen the bottom in 2007," he said. "It's unlikely we're going to see a meaningful recovery in 2008 locally and nationally."
Morici predicts a somewhat quicker turnaround. "My feeling is it will bottom out sometime after Memorial Day," he said. "It could happen in the summer; it could happen in the fall. So much depends on the national economy."
He said, "A decline of 10 percent is unrealistic. It's going to be more in the range of 5 to 7 percent."
The National Association of Realtors has a more optimistic view. The group forecasts that the national median price of an existing home will drop 1.7 percent this year and rise 2.2 percent next year. New-home prices, it predicts, will drop 2.2 percent this year and go up 1.7 percent next year. The group doesn't make local forecasts.
There's even disagreement about what has already happened to prices. It depends on how changes are measured.