Real estate (residential and commercial) can fall more than 20% in one year
Joe Weinman
Oct. 4, 2007

The route in residential real estate has just started. The market place can fall approximately 20% from here according to many realtors and economists.

The biggest trouble will be in big cities that saw unbounded rise in prices since year 2000. The other problem is that some investors who were caught with a large inventory of unsold homes, tried to convert these properties into residential and commercial rental properties.

That depressed the commercial real estate. Now there are commercial properties that are unsold.

The 20% decline in real estate prices can come all on a sudden. The biggest culprit is the lack of lenders willing to take any risk at this stage. If loans are not available, the markets will fall very sharply. The homeowners that are hanging on to their properties can all on a sudden is in a panic mode.

That is exactly what happened in 1930-36. When the Great Depression started. No one understood what was going on. All on a sudden homeowners realized they lost half the value of their properties. That created real panic and a zillion properties were put for sell. That depressed prices even further.

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