Two-Year Real Estate Cycle Become More Balanced

Many people are worrying that the surging real estate market is nothing more than a fluke that is going to reverse next year. This is one reason why the market is not balanced yet. Currently, there more buyers than there are sellers, which has created high home prices and a seller’s market. As a result, analysts say this is a sign of a real estate bubble that is about to burst.

 In 2007, the real estate market was doing extremely well and homes were selling faster than ever before, and for more than they ever had before. As a result, many people thought the good times would last for years to come, as they did in the 1990s. Sadly, in 2008, the market crashed and real estate prices fell drastically. By 2009, things began to recover again to the levels that they were in 2007. When one looks at this on a graph, it looks like a V with home prices and sales falling sharply and then rising sharply. Industry analysts stress that housing prices will not keep rising and things will become more balanced and beyond 2010, there may be a changing situation in the real estate market.

 It is important to not get carried away with enthusiasm for the real estate market, many industry experts say. They stress that while the home prices and sales have increased by an average of five percent every month when compared with 2008, overall prices for the 2009 are only slightly higher than that of 2008.

 Industry experts say that there will be a price overshoot, which is already happening, which will continue through the first part of 2010. They say that as there are more buyers than sellers, home prices will continue to rise and bidding wars will become fiercer in places like Toronto. However, as 2010 progresses, there will become a more balanced situation in the real estate market as more home owners jump in on the real estate market to sell their home and take advantage of higher prices. This will then cause the market to balance because there will be enough homes for buyers, thereby lowering prices to a more balanced level. Less people will be buying expensive houses in bidding wars, and there will be more homes on the market. This means that 2010 will be a good year for buyers and for sellers.

 Industry experts warn though, that 2011 could see a reversal. Most likely not to the extent of 2008, but there is the possibility that housing prices and sales will fall in 2011 before balancing once again.