Everybody is wondering where real estate is going now.  It has been many years where real estate was a sure investment and many investors, people and banks did not doubt of increasing value of the real estate.  However, we became observers of a failure of plans and assumption.  I would not say it is a crush as many reefer  to but more a correction in a bloated value bubble that expanded on fake assumptions and overestimation.  Now free market rules take its action and correct the values.  Let’s look on what is happening today .

As it can be hear from many news sources as well as statics,  buyers (especially first home buyers)  activity picked up significantly in the last few month.  Well lets think about why it would not.  Prices are very low, and came down to almost affordable.   People who could not afford a house can now assuming they have a stable job and their investments are not in total mess.  8000$  government credit incentive is there and one of the lowest mortgage rate averaging 5% and lower.   No wonder activity picked up, no matter what happens people need to live somewhere and invest in something that is more stable then securities.  However, looking at the statistics we can see the activity is compared to last year activity where it was so minimal where anything can be better than it was.   Though, we see healthy correction and activity on real estate market.  We do not expect overnight changes but all incentives are there for a buyers:  low mortgage rate, government credit and low prices(according to Chase-Shiller Index averaging first Q of 2003).   However, I do not expect huge surge in uprising activity until market stabilize further due to the fact that there are many people who lost a job, on the verge of losing one, or just does not have good credit since banks are not so easy on mortgage( I wish they realized it before this mess) and finally people lost confidence so some are just sitting with  cash and afraid to make a move.

Prices – are still going down.  No wonder why, number of forecloses where almost historically high, buyers activity was lowest in past year and house inventory grew very high.   Regardless of picked up activity market equilibrium (supply and demand) is not reached and will not be a for a little while until inventory decreases.  According to  

Chase-Shiller index (http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html) average national prices as of March(last reported) are avarging beginning of 2003 (unbelievable).  However, as first time home buyer I see an opportunity.   For the past 6 month prices come down in average 2-4% a month what is high but I suspect this number to slow down and start bottoming in the near future.   

Activity across US is not evenly spaced.  Some regions like Charlotte, Boston and some others(reefer to index)  has not come down(10-15%) as much as Florida, Arizona and California did.  This was manly attributed to inflated prices in that above regions due to many investments that people did in the regions and low primary residence buying.

In conclusion, if you are a buyer it is all in your hands.  No reason to rush but is good to search and if you see a right house, make a fair bid and do not miss 8K government credit that is over this year but do not rush for this as well.  Another reason to start picking up in your search is Mortgage Rate what slowly going up and will continue.   Due to all government spending raising  inflation is inevitable  what will cause the rate to go higher.   Locking low rate is important even if prices still come down because when inflation will equal you arte and it will eventually if rate stays as low as it is now you are the winner.  Also, do not forget that regardless of the situation good houses go quick so do not take long time when you see a right place for you to live.