With Interest Rates on the Rise...

With interest rates on the rise, analysts and real estate professionals expect the record number of homes now on the selling block to spend more time on the market.

Merrill Lynch reports that the backlog of unsold residences is currently at a nine-year high and the number of unsold newly constructed houses has soared 20 percent in the past year. David Rosenberg, the firm's North American economist, believes the result will be a "softer pricing environment and a reversion to a buyer's market from a seller's market."

As the residential property market continues to show signs of a slowdown, more and more market watchers now caution that a cooldown in the commercial real estate market also could be seen in the months ahead despite the fact that many Wall Street banks remain eager to finance such large projects as office skyscrapers and upscale condominium complexes.

Real Capital Analytics Inc. reports that approximately $220 billion in U.S. commercial space changed hands last year, a significant increase from $186 billion in 2004. Buyers of commercial office properties could be making the safest bets because the fundamentals supporting the office market—job growth, fewer new buildings coming onto the market, and so forth—are on the upswing.

Source: The Wall Street Journal (01/03/06); Haughney, Christine