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2006 was the non-year for real estate market in 2006. The sales will be down in 2006 about 9 percent from 2005, a record setting year according to the report published by the National Association of Realtors(R). Many markets waited for spring market which was disappointing. Markets then believed buyers would re-group in summer, and buyers were a no-show. Fall and last market hopes were dashed when fall came and went, with plenty of traffic at open houses, but few contracts.
Pent-up demand from a lackluster 2006 should drive buyers back to market. But, these savvy buyers will be on the lookout for realistic prices and seller give-backs. Most buyers will tell you point-blank that their income gains in the last five years have not matched rises in home prices. Real estate markets won't bounce back until home sellers realize as prices go up, the pool of buyers shrinks proportionately. Buyers with a home to sell will include a home-sale contingency, so sellers should be prepared to accept one.
Inventory levels will remain in the six to seven moth ranges. Listing leftovers from 2006 will roll into 2007. The leftovers are either un-realistic sellers whose pricing is from the "froth years" or their homes haven't been updated to keep up with the stiff competition and time-starved buyers. Mortgage rates will remain in the 5.5% to 7% range. Historically low, but low rates by themselves haven't motivated buyers to write real estate contracts in 2006.
Foreclosures will rise. Risky loans such as Interest-Only, Option ARM's and 100% financing will tap out buyers who’s used these "appreciation-oriented" mortgages. Prices will drop 4-10% before leveling off in the majority of non-seller's markets. Homes that are priced right and are in good condition which offer features and finishes that buyers demand, will sell close to list price in moderate market times. Flat or negative appreciation. Florida, Arizona, California and Washington D.C., will have unstable markets. Until sellers get a reality-oriented wake-up call markets in these locales will sputter and hiccup.
Ten states posted solid sales gains in the second quarter of 2006 versus 2005. Reported the National Association of Realtors(R). The gains ranged from an impressive 48% in Alaska to a low of 5.3 percent in Georgia. The other eight states included Arkansas, Texas, North and South Carolina, Vermont, Tennessee, New Mexico, and Wyoming. It is being viewed approximate investment and Residential real estate will return to being viewed as protection and housing.
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