Everyone wants to know what the real estate market is like today. Is it a bubble? Is it going to burst? Did it burst already? I don't have a crystal ball, so I can't claim to know all the answers. But, as a real estate agent, I can make some educated guesses based on experience.
I don't believe my market area (Western Connecticut/Greater Danbury area) is experiencing a bubble, nor are there any signs of an impending bubble burst. Prices have stabilized. Some areas have seen slight price reductions, other areas continue to see slight appreciation rates. Normalcy has returned to the home sale market.
The available inventory of homes for sale on the market has increased during the course of 2006, while at the same time some buyers have taken a step back, thinking prices will drop. More homes for sale mean greater choices for buyers, and fewer multiple offer situations. However, some smart sellers with homes priced right for their condition and location are still enjoying multiple offers from multiple buyers.
Interest rates remain near all-time lows. If interest rates shoot up dramatically, then might that mean a reduction in area home values? Possibly. But, with higher interest rates, that also means that that possibly-lower-priced home may actually cost you more due to the increased interest payments.
I've met many "buyers" over the years who have refused to buy, demanding that they will wait until the bubble bursts and prices drop. Many of them are still waiting 5 or 6 years later. They've missed years of extreme price appreciation, equity build-up, mortgage interest tax deductions, property tax deductions, and perhaps most importantly, the personal joys and pride of home ownership.
I closed on my own current personal residence in September, 2005. Many consider that to have been the peak of our area's prices, and the end of our "sellers' market." But, since then, in this new and different market, I have still enjoyed about a 7% value appreciation on my home. That is equity that those sitting on the sidelines and renting did not earn.
I believe that home ownership offers so many advantages - both tangible and intangible. Buyers and sellers need to take some of the national headlines they read about the "bubble" with a grain of salt and talk to their local real estate agents about their immediate area's market conditions. Make informed decisions about your real estate needs and wants and enjoy them for years to come.