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Real Estate Guide 2007
2007 overview
The real estate market was bed-ridden last year but 2007 brings new hope the market will get back on its feet.
2007 Overview
Home sales forecast brighter in '07

Anyone selling a home in the past year has likely suffered through some pretty stormy markets, but economists say a break in the clouds may be on the way.

That's because the highly anticipated "real estate bubble" that began deflating in mid-2005 has been losing air for the past year and a half, and may finally be out of air. And while some markets suffered through some deep slumps, forecasters are now predicting the worst may be over.

"It appears we are getting very close to bottom," says David Lereah, chief economist for the National Association of Realtors.

Lereah is one of several economists who agree that sales data show the national existing home sales market is on the verge of regaining ground.

"Sales have hovered for the last four months, scratching bottom and then coming up, scratching bottom and coming up again. We are comfortable this is now the bottom," he says.

But before you put away that umbrella, it might be best to check your local forecast; scattered showers may persist in certain markets for at least another year.

Over the past few months, Lereah says 75 percent of the nation's housing markets have expanded. Unfortunately, the ones that are still falling are posting losses large enough to bring the national numbers down with them.

"So, you can't generalize. You can't say 'We are in this sharp recession,' when it is only 25 percent of the markets that are losing ground," Lereah says.

Driving factors
What makes the current housing slump so hard to forecast is that the factors driving the contraction are different than those driving past slowdowns, says Dave Seiders, chief economist for the National Association of Home Builders.

"You have to put this in context," he says. "This is not a downswing connected to a recession. This one is special because the drivers are unusual."

In previous contractions, the entire economy hit a bumpy patch and mortgage rates were in double digits, Lereah says.

"This is not the case now," he says.

The primary problem now plaguing the housing market is one of oversupply, rather than a general economic malaise. In general, the markets that are suffering the most now are the ones that benefited the most during the run-up in prices.

-- Posted: March 8, 2007
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