Winding Down the Year 2007

December 26, 2007

As I reflect on the year 2007, I am struck by how rapidly the real estate market transitioned from a fairly neutral market in 2006 into a really "bearish" market (to use a stock market term). A "Bear Market" on the stock market is when investors want to sell and few investors are actually buying. During the hot real estate market of 2004 and 2005, the investor mind set took over and folks looked on home ownership as an investment rather than as a place to put down roots.

Over the long term, owning a home generally does prove to be a great wealth builder. I would not deny that approximately every 10 years the real estate cycle permits profits from "flipping" houses. However, 2007 became the year for the re education of sellers that the party was over for the time being and the re education of buyers regarding the true benefits of owning your owning piece of the planet.

As 2007 winds down, we learned that

1) Up markets come to an end

2) That supply and demand do influence prices

and

3) Creative financing is not always a winner

With this knowledge, we can approach the new year with a realistic approach to purchasing a home.