He's Not Buying It

Why one real estate pro is keeping his wallet shut

Among those who believe it's too early to hunt for bargains in the real estate market is John Burns, president of John Burns Real Estate Consulting, which advises large builders and investment firms. "Prices stabilize last, after sales volumes and foreclosures," he explains. "There's no way the real estate market is going to be stable next year."

Here's the way Burns sees it: Supply and demand are way out of whack, with a more than 10-month supply of homes on the market (that's 4.5 million homes for resale). Only when that imbalance gets worked out—which would mean a 46% decline in the inventory of homes for resale, according to his calculations—will prices start to recover.

With fewer buyers and increasing foreclosures adding to supply, that's going to take time. Around 2010, Burns reasons, the least bubbly of the markets will start reaching equilibrium, and in 2011 the national market should move into better balance.

In the worst markets, which include certain outlying areas in California (where Burns is based, in Irvine), his grim prognosis is that balance won't come until 2014. The bottom that California and Florida resale values are hitting is even lower than that of the early 1990s, so it will take longer for home prices to rebound. That's why Burns isn't buying, and his advice to his California employees who are looking to buy is unequivocal: Wait.

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