Sunday, January 22, 2006

With year-end results just available, it appears that 2005 will be remembered as the year that the strongest real estate boom in the island’s history began to moderate. After experiencing double-digit rates of appreciation for four years, the average selling price of residential properties increased about 8.2 percent last year, and the average selling price of unimproved lots grew around 7.6 percent.

The speed with which the transition from a seller’s market to a buyers market took place was amazing. Interestingly, real estate markets across the county experienced similar shifts. When comparing 2005 to 2004, many of the major market indicators abruptly changed direction in the second half of the year. Both the number of sales and the dollar volume of sales dropped noticeably in the second and the third quarters.

The good news is that prices have thus far held up, and the underlying market fundamentals that fueled the real estate boom on the island for the past four years still seem to be in place.

What do you see happening to the real estate market on the island this year?