By Peter Sachs
Q: I've heard the housing bubble is over. Does that mean I missed my chance to buy my own place? -Stephanie, Kentucky
A: On the contrary, the general sentiment is that now is a better time to buy than before. If you're selling, though, it may take you longer to unload your old place, and (sigh) you might have to settle for less.
Really, it's all basic economics, which is kind of scary but pretty simple to understand. Remember supply and demand? Bear with me a sec.
Take a city, and imagine all the houses and condos in it. It tak es time to build new ones, so the city can't adjust very fast when lots of people want to move in. Prices go up...and up and up, and you have a bubble. When investors start uploading their properties or people move away, there is an excess of houses (cuz you can't just sell them on eBay for $7.99 plus shipping), and prices drop. There, that's it. Supply and demand in a very basic nutshell.
The bubble metaphor may not be the best one to use, since it's pretty rare that it actually "bursts." Think instead of a balloon. The amount of air inside the balloon is the average housing price, but it takes a good amount of effort to pop the balloon. If you're in an expensive area like New York, it's probably a weather balloon 20 feet in diameter. What's happening now as housing markets cool is that the air is slowly being let out of the balloon.
It's hard to talk about things like this in general terms. Some cities like Las Vegas are growing pretty quickly and will keep doing so. Others, like Flint, Michigan, have been in a slow decline for a long time. No doubt about it, while 2005 was a record year for home sales, this year's sales figures are 25 percent less in some states, according to the National Association of Home Builders. Sales have slowed in 28 states so far this year compared with last year.
What all this means for you as a buyer is that you might have more choices when you're looking for your own place. With a greater "housing inventory," you won't get into fierce bidding wars as often and prices on individual houses will tend to stay lower. Don't think you'll get a bargain-basement price, though, unless you're in the market for un-irrigated land in the Middle of Nowhere.
And if you're selling? Don't give up hope. Just think about taking some extra steps to get your house in ship-shape . . . like replacing the carpet you spilled, uh, "beverages" all over.