_John Philip Mason is a residential appraiser with 20 years experience and covers the Hudson Valley region of New York. He’s a good friend and a true professional who provides unique insight to appraisal issues of the day. This week, John breaks out the “R” word in his weekly Solid Masonry post._ …Jonathan Miller

In an article just published by Les Christie of CNNMoney, [Real Estate Cools Down](http://money.cnn.com/2006/05/15/real_estate/NAR_firstQ2005_home_prices/?cnn=yes), we find a summary of the latest figures just released by NAR. Mr. Christie states “from the fourth quarter of 2005 to the first quarter of 2006, median prices nationwide fell from $225,300 to $217,900, a drop of 3.3 percent. It’s the second consecutive quarter that prices showed a sequential decline; in the fourth quarter of 2005, prices fell 1 percent from the third quarter.”

The fact that there is an unending stream of articles citing the national real estate market has cooled down comes as little surprise to those in the real estate industry. Real estate agents, attorneys, mortgage brokers and various other professionals who are out in the trenches have seen and talked (quietly) about the slow down that has developed during the past several months. But here is the surprise The boom may now be officially over (_it’s my post so I’m the official here_) and the real estate market is now in a recession.

Now mind you, no one else is calling it a recession and you can be certain NAR won’t be going there any time soon. But, I don’t know what else to call it.

In the world of economics, two consecutive down quarters is the official standard for declaring an economic recession. So why not do the same in real estate? I understand this may be too literal a translation, as real estate markets have seasonal fluctuations, but the talk in many real estate circles is the second quarter numbers are looking worse than the first quarter. In short, we have more inventory and less buyers.

As one agent recently reported to her fellow agents,

>”The good news is I have 56 active listings on the market and the bad news is I have 56 active listings on the market.”

We are awash in inventory in most market sectors and there is a significant volume of inventory under construction.
Rest assured this is not the end of the world, just another phase of the market cycle. Granted, this is one of the more painful phases as we are reminded, once again, that the fundamentals of market cycles remain the same and there is no “new economy.” But let’s not sit in the dark waiting for monthly and quarterly numbers to be released.

_The market has changed, because R is for real estate, R is for robust and R is for recession._