Homebuying plans plunge, are housing prices next?

Stunning new finding today.  According to monthly University of Michigan Survey of Consumers, consumer confidence dropped to it's lowest point in 12 years, pulling homebuying plans to their lowest point in a decade.  According to Inman News, "The decline in home-buying plans was due to an increasingly negative reaction to high home prices, as consumers expressed in September the least favorable assessment in nearly a quarter century." 

How did the housing market go from record high real estate searches on Boston.com in March of 2005 -- seven million page views generated by one million homes for sale searches -- to no-shows at suburban open houses, and now this news? 

Have inflated housing prices reached a historic turning point that will see prices decline for years or is this just the annual October scare made worse by gas prices doubling in the aftershock of Katrina? Consumer confidence slipped to a nine year low on Halloween 2002 just before the housing market entered into the second wave of the current price surge.  So, no big surprise that the relentless press coverage of the real estate bubble has pushed homebuying plans down again this time of year, right?

If, on the other hand, you believe that prices in 2003 to 2005 were bloated by opportunistic buying driven by fears of rising interest rates, investors, and interest-only loans, you may be patting yourself on the back for not buying this Spring at the top of the market and wondering how far prices will fall as interest rates rise.

Should you sit out the Fall market, or take advantage of the "let's make a deal" price slashing that begins this time of year while interest rates are still near forty year lows?  We'd like to hear your opinion.  Click on "Comments" below or call 617-876-2117 to record a one to three minute sound bite that we may use in a future podcast.