According to the February 19, 2007, issue of BusinessWeek, the homes for sale market has not crashed and is forecasting normal inventory levels for homes for sale by midyear.

We have gone through quite a lot of up and down forecasts over the past few years. For several years, forecasters were predicting the burst of the real estate market bubble, as it continued to grow by leaps and bounds. They said it would burst and insinuated that every real estate investor, as well as buyers and sellers of homes for sale would lose their shirts.

While prices have deflated in most areas in the past couple of years, thee was never the doom and gloom “burst”. There are many investors of residential homes for sale, who now find themselves in foreclosure, will probably lose a lot of money, and will suffer a less-than-favorable credit rating because of it. Many of these investors of homes for sale used the “no money down” and/or “get rich quick” financing schemes. For these unfortunate investors, that is the risk they took by investing in residential real estate. There also are some current sellers, however, who must sell their homes for reasons other than the deflating market. They may be forced to take a lot less money for their homes for sale than they originally planned. They are the real victims of the market bubble, but it is getting better – much sooner than anyone expected.

Currently, many existing San Diego homes for sale are priced about the same as last year at this time, which were at 2003 price levels. Construction has fallen sharply with builders trying to sell their current homes for sale inventories before building more. BusinessWeeks Peter Coy, however, is predicting that the homes for sale inventories may be back to normal levels by midyear. He based his projections on the continued low interest rates for homes for sale and income growth.

Current fixed-rate, 30-year mortgages have interest rates no higher than in June 2004. They averaged 6.2 percent during the last quarter of 2006, which is well below the average ten years ago.

Homes for sale in most areas remain affordable, according to the National Association of Realtors. Even with the rising prices during the bubble of more than 50 percent in the past five years, the association shows an affordability index for homes for sale of over 100. That means that income growth has kept up with rising prices, allowing a median income family to be able to afford a median-priced homes for sale.