Sunday, July 17, 2005

Are We Beginning to Reach the Inflection Point

A couple of new articles in the past few days have focused on some formerly hot areas starting to slow down. The following Wall Street Examiner piece notes increases in inventory and more price reductions in Las Vegas, Sacramento and San Diego:

An article in today's New York Times describes the plateau in Denver, Colorado:

Can NYC be far behind? The Times piece offers differing opinions on this:

"Optimists point to Denver as a model of an adjusting real estate market. 'I think it's a good example of when a market softens, what happens,' said David Lereah, the chief economist of the National Association of Realtors, a trade association. 'You see double-digit price appreciation go down to 4 percent or even 1 percent, and then it starts coming back to a historical norm of between 4 and 6 percent. That's very healthy. That's wonderful. It beats inflation.

But many analysts take a gloomier perspective, suggesting that the most heated markets could suffer more than Denver's so-called soft landing. 'I think Denver is a best-case scenario,' said John H. Vogel Jr., adjunct professor of real estate at the Tuck School of Business at Dartmouth College. In the case of markets like Naples, Fla.; Miami; and New York, he said, 'I think you'll see dramatic price decreases because I think the prices have become artificially inflated by trading and speculation."

We will wait and see.


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