Industry News

2006: Year of market correction

Long-awaited real estate slump arrives

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2006 was the year that some real estate forecasters had been predicting for several years. It was the end of the boom that was characterized by historically low interest rates, frenzied sales, large-scale new construction and rapid price appreciation. But it was not a bust, as many real estate markets in the country still experienced above-average sales. "All of the sudden this seller's market had morphed into a buyer's market," said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies. The signs began to appear toward the end of 2005, he said, that the market was in transition. "It seemed sudden at the time though all the signs were there before." Those signs, he said, included double-digit home-price appreciation, increasing investor interest and a rise in unconventional mortgage products that "acted almost as a steroid on the residential sector." Besides the obvious downturn, there were other goings-on for the real estate industry this year, too, incl...