America's Upcoming Real Estate Market: The REAL Pictureby Jeanette Joy Fisher Although bankers, mortgage brokers, and economists all seem to agree that the American real market is simply going through a correction period after a time of unprecedented growth, you'd never know that by what you read in the paper or see on television. For whatever reason, the media has decided that the future of American real estate is bleak, and they seem intent on conveying that message to the public. However, the REAL picture is actually quite bright, according to nearly everyone who actually works in the business, in whatever capacity. Here are some examples of what I mean:
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Supply and Demand While it's apparent that existing-homes sales in 2006 will end up showing approximately a 9% decline and new home sales will probably chalk up a decrease of some 18%, there's good news on the horizon. Some economists predict that 2007 home sales will also be lower, but 2008 looks to see a reversal of that trend. In other words, the runaway market of the past few years was unsustainable, putting homes out of reach for many Americans, so our supply-and-demand system worked exactly as it was supposed to and put the brakes on the historic price rises we've been experiencing. After a couple years of adjustment, more people will be able to get into homes as prices decrease somewhat, especially since interest rates are expected to remain close to current levels for the next year or so. Then, as demand increases, home prices will likely begin to rise as a result. Median Home Prices Even in the face of negative media coverage, the median price of homes has risen about 2.5% in 2006, and the median price gain for new home will be about 1%, according to statistics recently released by the Mortgage Bankers Association. That may be down from the double-digit pace of the last few years, but it’s much more sustainable, and is still a better return than you'd get on a savings account at your local bank. American Real Estate Market Put in its proper perspective, the real estate market of 2006 will go down as the fifth highest in American history, as far as residential mortgage production is concerned. Even the federal government doesn't seem concerned with the downturn in the real estate market. Economists are in nearly universal agreement that the Fed funds rate will remain at around 5.25% throughout 2007 and 2008, which is good news for people looking to buy homes during the upcoming couple years. Home prices will be down slightly in many areas of the country, but interest rates will remain low, compared to historic data. That means home buyers will be able to afford more home than they would have been able to if the trend of the past several years had continued. In the end, the important thing to remember is that real estate has always been one of the safest investments in the long run, and as long as you're financially able to maintain your mortgage payments, you'd be hard-pressed to find a better place to put your money. And that's the REAL picture, regardless of what you hear on television or read in your local newspaper! Jeanette Fisher helps first-time home buyers get the credit they need to finance a home mortgage. Free Credit Tips for Mortgage Financing at Free Credit Help. Should you wait to buy a home? |
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