ouring in from all parts of the country. In Miami, at the Jade Residences at Brickell Bay, 117 of the building’s 352 units are reportedly on the market. And in Manhattan, at Donald Trump’s 120 Riverside Boulevard condos, more than 20 percent of the building’s 250 units are up for resale, according to The New York Times.

And increasing supply almost always leads to falling pri

A housing downturn may be imminent, say economists and real estate investors alike — presenting problems for many people, but opportunities for others.

You’ve probably heard about the coming slowdown in the housing market for a very long time. Real estate is cyclical, and in the United States it has been in an upswing for at least five or six years, which is how long housing prices have exceeded the rate of inflation, says Susan Wachter, professor of real estate finance at The Wharton School at the University of Pennsylvania. That means it’s only a matter of time before we experience a downturn.

It’s hard to believe a downturn is really here. On March 1, the Office of Federal Housing Enterprise Oversight (OFHEO) announced that average U.S. home prices climbed 12.95 percent in 2005, despite rising mortgage rates in the second half of the year. That’s about double the historical average of 6.4 percent, according to Bankrate Inc.

But while the housing market is still appreciating, it’s appreciating more slowly. The Commerce Department announced on March 23 that new home sales tumbled 10.5 percent in February to an annualized rate of 1.08 million units, the biggest one-month drop in nine years.

That means properties are sitting on the market for much longer than they used to. You might expect that in California, where Bruce Norris of the Norris Group, a California-based real estate investment firm, says “we’ve gone from a three-month supply to almost a seven-month supply.” But examples are pouring in from all parts of the country. In Miami, at the Jade Residences at Brickell Bay, 117 of the building’s 352 units are reportedly on the market. And in Manhattan, at Donald Trump’s 120 Riverside Boulevard condos, more than 20 percent of the building’s 250 units are up for resale, according to The New York Times.

And increasing supply almost always leads to falling pric

prices have exceeded the rate of inflation, says Susan Wachter, professor of real estate finance at The Wharton School at the University of Pennsylvania. That means it’s only a matter of time before we experience a downturn.

It’s hard to believe a downturn is really here. On March 1, the Office of Federal Housing Enterprise Oversight (OFHEO) announced that average U.S. home prices climbed 12.95 percent in 2005, despite rising mortgage rates in the second half of the year. That’s about double the historical average of 6.4 percent, according to Bankrate Inc.

But while the housing market is still appreciating, it’s appreciating more slowly. The Commerce Department announced on March 23 that new home sales tumbled 10.5 percent in February to an annualized rate of 1.08 million units, the biggest one-month drop in nine years.

That means properties are sitting on the market for much longer than they used to. You might expect that in California, where Bruce Norris of the Norris Group, a California-based real estate investment firm, says “we’ve gone from a three-month supply to almost a seven-month supply.” But examples are pouring in from all parts of the country. In Miami, at the Jade Residences at Brickell Bay, 117 of the building’s 352 units are reportedly on the market. And in Manhattan, at Donald Trump’s 120 Riverside Boulevard condos, more than 20 percent of the building’s 250 units are up for resale, according to The New York Times.

And increasing supply almost always leads to falling pri

rices climbed 12.95 percent in 2005, despite rising mortgage rates in the second half of the year. That’s about double the historical average of 6.4 percent, according to Bankrate Inc.

But while the housing market is still appreciating, it’s appreciating more slowly. The Commerce Department announced on March 23 that new home sales tumbled 10.5 percent in February to an annualized rate of 1.08 million units, the biggest one-month drop in nine years.

That means properties are sitting on the market for much longer than they used to. You might expect that in California, where Bruce Norris of the Norris Group, a California-based real estate investment firm, says “we’ve gone from a three-month supply to almost a seven-month supply.” But examples are pouring in from all parts of the country. In Miami, at the Jade Residences at Brickell Bay, 117 of the building’s 352 units are reportedly on the market. And in Manhattan, at Donald Trump’s 120 Riverside Boulevard condos, more than 20 percent of the building’s 250 units are up for resale, according to The New York Times.

And increasing supply almost always leads to falling pri

lized rate of 1.08 million units, the biggest one-month drop in nine years.

That means properties are sitting on the market for much longer than they used to. You might expect that in California, where Bruce Norris of the Norris Group, a California-based real estate investment firm, says “we’ve gone from a three-month supply to almost a seven-month supply.” But examples are pouring in from all parts of the country. In Miami, at the Jade Residences at Brickell Bay, 117 of the building’s 352 units are reportedly on the market. And in Manhattan, at Donald Trump’s 120 Riverside Boulevard condos, more than 20 percent of the building’s 250 units are up for resale, according to The New York Times.

And increasing supply almost always leads to falling pri

ouring in from all parts of the country. In Miami, at the Jade Residences at Brickell Bay, 117 of the building’s 352 units are reportedly on the market. And in Manhattan, at Donald Trump’s 120 Riverside Boulevard condos, more than 20 percent of the building’s 250 units are up for resale, according to The New York Times.

And increasing supply almost always leads to falling prices, says Norris. For the first time since the third quarter of 2003, one of the regions in the much-followed OFHEO index showed a four-quarter price decline: Prices in Burlington, North Carolina, fell about 1 percent between the fourth quarter of 2004 and the fourth quarter of 2005.

That may not seem like much, but economists see it as a foreboding sign — and it’s not just due to rising interest rates. “Housing valuations have become somewhat stretched in some areas over the past year,” says Josh Feinman, an economist with Deutsche Asset Management in New York. “Some cooling is likely.”

The slowdown will affect anyone who’s buying and selling property, of course. But real estate speculators — individuals who buy property with the intention of re-selling quickly, or flipping it, for a profit — are likely to suffer the most. That’s because they could be paying mortgages and maintenance costs on properties they can’t sell and can’t rent out for enough money to cover their costs. According to Redbrick Partners, a New-York real estate investing firm specializing in single-family homes, half of the rent an investor can potentially collect does not flow to the bottom line, because it gets eaten up by vacancies, taxes, maintenance, etc. And as supply has increased over the past decade, demand has decreased. Today, Redbrick Partners says rental yields on single-family homes have declined from 7 percent in 1976 to under 5 percent today. And Norris says that in areas of California, a $500,000 house would rent