Real Estate Forums

San Diego Real Estate · 09-15-2006, 02:24 PM

Daily Real Estate News | September 13, 2006
Home Prices to Keep Falling in '06, NAR Says
Home prices are expected to continue on a modest decline for the remainder of the year the seller’s market transitions to a buyer’s market, the NATIONAL ASSOCIATION OF REALTORS® testified today at a Senate committee hearing.

Yet, contrary to some news reports, there is no housing bubble, and the slowdown is actually a good thing for many local economies, NAR president Thomas M. Stevens said at the hearing, titled “The Housing Bubble and Its Implications for the Economy.”

“After five years of outstanding growth, the housing market is undergoing a period of adjustment and becoming more and more of a balanced market between buyers and sellers,” he said.

Many Local Markets Still Going Strong

Even with falling demand and increased supply, home prices are still appreciating — although at no where near the double-digit rates of the past few years. “While recent developments raise concern, it is important to remember that the housing market varies significantly across the country,” Stevens said.

One-third of the country (by population) is still seeing rising home prices, including Alaska, New Mexico, Vermont, and many states in the South, excluding Florida. States that experienced the greatest increases in home prices in recent years are experiencing significantly lower sales. These states include Arizona, California, Florida, Nevada, and Virginia.

Also contributing to the cooling housing market is a nearly one-point increase in mortgage rates, speculative investors pulling back, and first-time buyers being priced out of the market.
“Pressure is being felt in the housing market due to rising mortgage rates,” Stevens said. “Home buyers have become exhausted financially, which explains why sales have tumbled in higher-priced regions of the country.”

Sales to Fall 8% This Year

NAR forecasts a drop in home sales of around 8 percent in 2006, followed by another 2 percent decline in 2007. The forecast takes into account stabilizing mortgage rates and a modest economic expansion. However, a significant shift in interest rates or a change in the economy would alter the forecast.

Slow home-price growth — of less than 3 percent in 2006 and 2007 — also is predicted.

NAR notes that a soft landing is possible under the right circumstances and affordable mortgage financing is an important component in achieving this.

“Because the housing market strongly supports the economy and drives consumer spending, it is imperative that the Congress adopt policies that encourage home ownership and make purchasing a home obtainable for the millions of families who desire to own a home,” Stevens said. “NAR stands ready to work with Congress to continue to open the door to the American dream of home ownership.”

— REALTOR® Magazine Online

Missouri Real Estate Pro · 09-21-2006, 10:52 AM

Glad to hear someone with some clout finally say it. Everyone I've talked to has always maintained that there was no " housing bubble". There for awhile I thought people were actually going to be scared into creating one though!

SEOWolf · 09-21-2006, 10:59 AM

Al - while we are not in a hot market like yours in San Diego it seems as though this has been a very good summer for us here in Missouri.

Prices in the Ozarks are still very low compared to the rest of the country which could be a contributing factor.

The price increase slow down predicted by NAR is pretty much the same we have been facing historically in the rural areas.

In reading your post and other info on the web I come away with the impression that instead of the “Sky is falling” we are slipping back into a business as usual scenario. While the enormous rise in prices in your “hotter markets” was great for investors that “flipped” properties for a profit it really hurt the average consumer IMHO.

I’m all for a consistent 2-3% annual appreciation figure.

Again, I don’t think this a “Bubble” bursting – we’re just going back to reality and business as usual.

~VegasMack

Las Vegas Homes · 10-16-2006, 10:57 PM

Well, that is a helpful article for all of us, especially those of us in CA and NV. I like to have tools like this one on hand here in the Las Vegas real estate market in order to explain to clients what is transpiring.

Bama-Homer · 10-17-2006, 10:08 AM

I have to agree with VegasMack, in regards to returning to a normal appreciation rate for homes.

Here in Alabama, the market has maintained consistant growth. I believe this is due to the lack of over inflated home prices over the past two or three years that other areas have experienced.

Sure there have been neighborhoods that went through the roof. Home Owners who purchased in those neighborhoods over the past 12 months are feeling the crunch.

But for the most part, homes here that have kept a steady rate of appreciation in the 2% to 5% range, will continue to provide positive returns when sold.

Here's to a busy Holiday Season!

Las Vegas Real Estate · 10-18-2006, 06:49 PM

Yes, I also agree with everything being said. I like to have hard facts as well in order to present to my Las Vegas real estate clients when they have questions regarding the market and the so-called "bursting bubble".

Thesa · 10-19-2006, 10:07 PM

I am finding that targeting home owners that have owned for 10 years or more is a very nice nitch here... they are ready to move up feel like they are not buying at the top and still walking into a new place with equity and they have made it through the roller coaster and feel like they are in a win win situtation.... they have a ton of equity from the price increases and the "buyers market" makes them feel like they are getting a "deal"

SEOWolf · 10-20-2006, 10:28 AM

Great idea and post Thesa!

Thanks for sharing.

~VegasMack

REMAX LV · 11-08-2006, 08:19 AM

Yes, thank you for the informative and POSITIVE post! It is nice to hear someone educated make some sense of all this real estate bubble mess! I know that I hear more than I can handle within the Las Vegas real estate market regarding the so-called "bubble"!!