Thursday, January 04, 2007

Housing to Stabalize in 2007

For many residential real-estate markets in the U.S., this year started with an advantage to sellers and ended with buyers holding the upper hand. But, unlike some people had expected, the switch didn't follow the deafening "pop" of a massive real estate bubble.

That spells good news for both buyers and sellers in 2007, as markets return to balance, prices moderate and, if interest rates remain subdued, sales begin to edge higher.

Many markets saw slower home-price increases and a build-up of inventory in 2006, much to the dismay of optimistic sellers. And while speculators -- investors who many argue are partially responsible for the massive housing boom -- tried to exit the market, buyers began waiting out the correction to get the best prices, causing a drop in home sales.

In many areas, however, the correction wasn't as harsh as some had feared. In fact, the year as a whole might even have been described as "healthy" if the country's perspective hadn't been skewed by the boom of the past few years, said John McIlwain, senior fellow for housing at the Urban Land Institute. The market is still "well within long-term norms," he said.

"I think the story of the year is the bubble that wasn't," McIlwain said. "Instead of a bubble busting, so far it has been a healthy correction."

One of the bright spots of this correction: stabilized interest rates. Rates reversed course and trended down beginning in the summer. Last winter, some interpreted increasing rates as a signal that the real-estate party was coming to an end; now, with the 30-year fixed-rate mortgage averaging just above 6% and a lot of inventory on the market, it's not a bad time to buy, McIlwain opined.

And it does appear that this period of correction may be soon drawing to a close, said Lawrence Yun, senior economist for the National Association of Realtors.

"The past three, possibly four months have been seeing more stabilizing patterns," Yun said.

Inventory appears to be topping off, monthly declines in home sales seems to leveling and mortgage purchase applications appear flat, he said. All are indicators, Yun said, "that perhaps the bottom has already passed or (the market) is trying to reach the bottom over the very short term."

In San Diego, one of the hottest markets during the boom, realty executive Vicky L. Campbell said she's seeing evidence of the stabilization in her local market. October and November turned out to be good months for sales, said the sales manager at Century 21 1st Choice Pacific. She's even more optimistic for the near future as prices become more realistic -- as long as interest rates hold steady. "We're going to have a really good year next year," she said.

To view all available homes for sale in the San Fernando Valley, visit:

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