Scott
Excellent overview of past, present and potential future real estate results. As with all analysis, assumptions need to be made but it appears Scott has been realistic in his assumptions. The possibly the downward pressure on price, in my opinion, will be stronger than the 1% Scott suggests. Based on the potential number of foreclosures hitting the market within the next 9 months, sellers will be forced to reduce their asking prices. The fact that the levies of all taxing bodies continue to increase every year will add to that downard pressure. Higher budget requests in combination with lower assessed values of homes means continued property tax increases. There is no way of getting around the issue. I believe the actual price reduction for the year will be close to 5-7%. There maybe less inventory on the market because people realize they can't sell their homes even at below market values. If you are underwater on your mortgage and the lender will not agree to a short sale, homeowners are stuck in their homes because they can't pay off their mortgages by selling them home. Scott discussed homes under contract but didn't tie those with what prices they could have been sold at prior to january 2008. The price drop since January 2008 is probably between 25-40% on most houses in the tri-cities.

The crux of the forecast is indeed the balance between foreclosures and a strengthening market with increased buying activity. Again, not all of the properties in pre-foreclosure will be foreclosed upon. Still, as these hit the market they will temporarily decrease home values and then we climb later in the year. I agree that seller psychology is at play here: sellers don't want to sell at low prices. That's a basic law of supply and demand:. low price=low supply. Prices have indeed decreased since 2008 and is the reason sellers aren't selling unless they have to do so. As buyers continue to enter the market with low levels of inventory (increasing demand, low supply) prices will be pushed upward. Finally, the only thing that increases taxes is increased tax levies by the governmental entities. Lower assessed values in and of themselves don't increase taxes.