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.
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
"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,"
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.