Real Estate Market Trends
August 2008

The Economy

We're in a recession that has been ignited by the bursting of the housing bubble and the credit crisis. Is the bottom of the economic cycle anywhere in sight?

Unemployment Grows: Recessions by definition mean that we're going to be seeing rising unemployment. We're already up past 5.5 percent. Expectations are for 6 percent and maybe higher.

Consumer Spending Slows: Higher gas and energy costs, rising unemployment, inflation, low real-income growth, and reduced availability of credit lead to slowdown in consumer spending. The result will be lower corporate earnings, putting additional pressure on the stock market.

Housing still on the Down Slope: Housing prices are down significantly but buyers have not yet put a dent in the oversupply that continues to weigh on the market. We are working our way through the real estate correction but prices must come down some more before we begin to make significant gains on the national over-supply of housing.

Best guess: The economy bottoms in the fourth quarter, but recovery will be a long process, probably lasting through 2010.

Greenwich

• Home prices are forecast to deflate an average of 6.3 percent for the year 2008.
• We are seeing "new construction," intended for sale, instead offered for rent.
• Newly listed properties continue to outnumber "sold" properties.
• Buyers continue to be very cautious.

-- Harry Pool