The real estate boom is over. After enjoying years of healthy real estate activity, states across the country are now slowing down. As an industry analyst would put it, the real estate "market is heading back toward earth."
In Texas, for instance, the state saw strong job growth and sizzling home prices over the last few years. However, the Texas A&M Real Estate Center Chief Economist Jim Gaines said that 2016 will be a "transition year" as there will be a slower growth in the state's economy and jobs. This will put a break on soaring home prices. He forecasted a statewide gross domestic product growth of less than one percent.
"The feeling of a boom economy is going to leave," Gaines said. "The question is not whether we're going to slow down and possibly decline, but at what rate and what's the timing."
Louisiana also saw a massive job loss as Acadiana's oil and gas workers were left out of jobs. The oil and gas industry was negatively affected by the international oil glut and price war, forcing oil and gas workers into unemployment. About 2,000 people were laid off in Acadiana alone. More losses are to be expected and it is predicted that the high unemployment rate will cause housing, hospitality and transportation to fall.
"The ripple effects are greater than a year ago," described Cary Heath, a University of Louisiana at Lafayette economist.
While New York City real estate continues to close off expensive deals, several signs of a slowdown had been observed. Local brokers reported that bidding wars are less frequent, open houses no longer have lines out the door and homeowners are cutting down their asking prices, especially for luxury properties.
"I have seen more broker incentives and price reductions in the last few months than I've seen in the last three years combined," said Leonard Steinberg, Compass President. "The market got carried away with itself in the first half of 2015. Some people went in with crazy pricing expectations."