Introduction: Housing is a form of capital. Watch the following film clip. Then, use what you know about factor markets to interpret the story with a graph. 18:42:04 JIM AVILA (OC) In our 'Money Watch" tonight, surviving the cool down in the housing industry. GRAPHICS: COOL HOUSING 18:42:11 JIM AVILA (OC) After record run-ups and prices and demand, a new report warns of a growing decline in the once-hot real estate market. ABC's John Yang is in the nation's capital tonight, where buyers and sellers are trying to adjust to the changing climate. 18:42:26 MEGAN BUCKLEY, REAL ESTATE AGENT They've already dropped the price $5,000. 18:42:28 JOHN YANG, ABC NEWS (VO) This weekend, real estate agent Megan Buckley, has been showing condos to first-time home buyer, Lynn Vaughan. 18:42:35 MEGAN BUCKLEY Looks like new carpet. 18:42:35 LYNNE VAUGHAN, FIRST TIME HOMEBUYER I've been waiting and saving and hoping that the real estate gods would be with me. 18:42:42 JOHN YANG (VO) She may be in luck. Washington, DC's once red-hot market, is cooling off. 18:42:47 MEGAN BUCKLEY Last year, things would sell within a couple days. For above asking price or there were multiple bids. It is more of a buyer's market now. 18:42:54 JOHN YANG (OC) The situation's the same across the country, as home sales decline and mortgage rates rise. GRAPHICS: TWICE AS MANY HOUSES AS LAST YEAR GRAPHICS: MORTGAGE RATES 10% HIGHER 18:42:56 JOHN YANG (VO) In Washington, DC, There are twice as many houses on the market as a year ago. And nationwide, mortgage rates are 10% higher than last year. Ron Wynn is a real estate agent in Los Angeles. 18:43:11 RON WYNNE, REAL ESTATE AGENT We're starting to see a little bit more sanity in the marketplace. And a little bit more normality to our marketplace. 18:43:19 HOME BUYER, FEMALE So nice. 18:43:19 JOHN YANG (VO) If you're in the market as a buyer or a seller, there are some things to consider. For buyers, more houses for sale, far longer time, means you have more choices and might be able to negotiate a better deal. GRAPHICS: BUYERS GRAPHICS: MORE HOUSES FOR SALE, LONGER TIME ON MARKET, MORE CHOICES, NEGOTIATE A BETTER DEAL 18:43:31 JOHN YANG (VO) Sellers may want to think about holding off and waiting out the current market cycle, which usually lasts five to seven years. GRAPHICS: SELLERS GRAPHICS: DELAY MOVE, WAIT OUT MARKET CYCLE, FIVE TO SEVEN YEARS 18:43:38 JOHN YANG (VO) That's not an option for Josh Good, who's moving to Vancouver for a new job. 18:43:45 JOSH GOOD, HOME SELLER I'm asking a little less than I purchased it for. And then there's commissions, you know, a six percent commission, which really hurts. 18:43:51 JOHN YANG (VO) And economists warn there could be broader implications. 18:43:53 RYAN RATCLIFF, UCLA ANDERSON SCHOOL OF MANAGEMENT The worst-case scenario is that the weakness in the housing market is such a drag on spending and employment, that it tips the economy into recession. 18:44:02 MEGAN BUCKLEY I think a lot of sellers are getting antsy. 18:44:04 JOHN YANG (VO) Something to watch since eight of the last ten recessions began with a downturn in the housing market. John Yang, ABC News, Washington.
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