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Correction Imminent In Many Upscale Home Markets
| | Thursday, November 20, 2003 @ 12:00 PM EST
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Contributed by: Ford Group
Ford Group Properties
Read more archived articles about Economy - Bad
I received the following from H.S. Dent, author of The Roaring 2000's, The Great Boom Ahead, et al. I thougth I would share his insight with the rest of TCI. To view his website, visit www.hsdent.com
Home prices in high-priced markets will slow and decline over
the remainder of the decade, according to the October edition
of the H.S. Dent Forecast newsletter. These markets include
Dallas, San Francisco, Denver, Miami, Boston, New York.
Predicting an increasingly booming U.S. economy over the
remainder of the decade, the
widely respected Forecast says
that upscale real estate is likely to be of significantly higher risk
than stock or mutual fund portfolios.
"Residential real estate may be nearing a long-term top over the
next two years with many markets not seeing new highs for decades
given the larger decline our demographic indicators are
forecasting after 2010," the Forecast said.
The Dent forecasting method is based on proprietary demographic
models that currently show baby boomers are peaking in their
trade-up home buying cycle.
Rodney Johnson, president of H.S. Dent Publishing, writes: "If you
are trying to decide whether or not to sell your current home or
purchase one in a certain area, then national trends are only
part of the equation. You must consider local demographics."
While demographic trends in many locations will put pressure on
high-end residential prices, a strong economy and low mortgage
rates will cushion the decline "until after 2010 when prices will
fall much more substantially," the newsletter said.
In upscale markets, there have been rising prices on declining
volume. "Like in stock markets, you are likely nearing a top,"
the Forecast points out.
Looking to more positive real estate trends resulting from baby
boomer demographics, the Dent analysis points to "continued
strength and rising prices in ex-urban and vacation/retirement
areas" as people in their late 50s and early 60s buy just ahead
of retirement.
Noting that only about a quarter of retirees relocate for
retirement, "the relocation of 24 percent of baby boomers over
the next two decades will cause major growth pressures" in
retirement areas, the newsletter states.
"This maturing segment, especially those in their mid-50s to
early 60s will represent a strong force in residential real
estate trends for the next two decades as the massive baby boom
generation moves in rising numbers into peak trade-up, vacation
and retirement buying," according to the Forecast.
"This is the primary reason that vacation homes and residential
prices have accelerated so much since 1999 in attractive
retirement/vacation markets like Miami and Ft. Lauderdale, and
why such markets are likely to out-perform again after this likely
near-term correction."
"The downside in upscale and the more bubble-like markets from
Miami and Ft. Lauderdale to Boston, New York and San Francisco
could be substantial," the Forecast advises readers. "If you are
already looking at moving or relocating or paring down real estate
holdings, assessing and acting sooner than later could make a big
difference."
H.S. Dent Publishing of Dallas, Texas helps people to understand
change and anticipate its arrival through its publications,
including the monthly H.S. Dent Forecast. The Dent methodology
is based on demographics, or the study of whole populations. Its
demographic models have consistently proven their ability to
provide incredibly accurate economic predictions.
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the many points have
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