"“The problem for a number of potential first-time buyers - and thus for all sellers - is that prices are still high compared with incomes. After doubling between 2000 and 2007, the average metro-area home price dropped to $306,000 last year. To swing that, a first-time buyer with a 10 percent down payment would need a salary of about $70,000. And $306,000 was the average for all homes, from condos to Colonials. Most single-family homes are more expensive.”
“People who can’t sell their starter homes can’t buy a bigger place, and the owners of those bigger places can’t go anywhere, either. That’s why economists say home sales probably won’t increase until prices fall even more, as they have in other parts of the nation. ‘The buyer’s going to win this game of chicken,’ said Anirban Basu, a Baltimore economist.” "
From: http://thehousingbubbleblog.com/index.html March 4, 2009
This excerpt was from a Baltimore-based article, but I think it portends a grim RE future for us in southern PA because, except for the DC area, which has seen some slippage but is still a pretty good market (in comparison to other places, or this is what I am told), many areas in MD didn't see the same bubble inflation, just as we here in southern PA/Chester County saw prices increases but not at the same rates as other places.
Long story short: There are a lot of upper-end colonial development homes on the market right now--many of them in the high 300s/low 400s--and the very people that those sellers are trying to attract are likely trying to sell their lower-end homes to no avail.
Another article mentioned that incomes need to rise or prices need to fall to get to a sweet spot where having a twenty percent downpayment will be more common as we move forward. Folks, the days of Liar loans/No Docs and No Downpayment loans are definitely over. As a matter of fact, I bet it's pretty damned tough to get a regular thirty or forty year fixed rate even with twenty percent down.
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