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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
Spring is bargain time for home buyers

Two years of stormy real estate markets appear to have created an ideal climate for bargain-minded house hunters who know where to look.

Real estate experts say a switch in the psychology of the housing market has helped buyers to see the silver lining around the housing market storm cloud and usher in the fine shopping weather.

"We are now in a solid buyer's market," says David Lereah, chief economist for the National Association of Realtors (NAR). "It has been a seller's market for many years, but now we are seeing people across the country making deals and bringing prices down."

A loss of confidence on the part of real estate investors triggered the psychological switch, he says. "What happened was, investors pulled out in droves, and the housing markets went dead," Lereah says. "When the investors stopped buying, regular buyers got scared."

That fear drove many house hunters to the sidelines, waiting to see what would happen -- worrying that housing prices would continue to fall.

"At the same time, sellers refused to bring their prices down, and so buyers had no real incentive to get back in the market," Lereah says. "With everybody sitting on the sidelines, the market came to a standstill."

Sellers conceding

With a dearth of buyers, sellers realized they would have to make concessions on their sale prices.

"Now they are making deals," Lereah says.

If the downturn was simply a product of a short-term panic, things would likely be back to normal by now. But Mickey Levy, chief economist at Bank of America, points out that the market is also suffering from an oversupply of homes created by an overzealous homebuilder community.

"While demand is picking up, there is still that large supply overhang," he says. "And while the numbers are starting to come up for sales, prices still have a bit to drift before they start rebounding." 

And with a listless housing market, savvy buyers in many markets across the country are finding themselves in the best position they have been in for nearly a decade when it comes to price negotiations. Levy does warn, however, that not all sellers will be in a dealing mood.

-- Posted: March 8, 2007
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