Posted on 09/07/2006 7:56:35 AM PDT by Hydroshock
WASHINGTON (Reuters) - U.S. home sales will be a good deal weaker this year than earlier thought as potential buyers remain on the sidelines waiting for better deals, a national real estate group said on Thursday.
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The National Association of Realtors said sales of existing homes were likely to drop 7.6 percent this year to 6.54 million. A month ago, the group thought existing homes sales would fall only 6.5 percent to 6.61 million.
The association, which said housing prices were likely to dip temporarily below year-ago levels, also revised lower its forecasts for new homes sales and housing starts,
It said new homes sales looked set to drop a steep 16.1 percent to 1.08 million units, compared to a previous forecast of a fall to just 1.12 million.
NAR said builders were now likely to break ground on just 1.87 million units this year -- 9.6 percent lower than last year's level and a bit below its prior 1.88 million forecast.
"This year sales are slowing, homes are plentiful and sellers are negotiating," NAR chief economist David Lereah said in a statement. "Under these conditions, we'll probably see prices dip temporarily below year-ago levels as the market works through a build up in housing inventory."
"This is a normal pattern during a market correction, but home prices should return to positive territory within a few months and annual appreciation will be slower than historic norms," he added.
NAR said the median price for existing homes -- the price at which half of homes sell for more and the other half for less -- should grow 2.8 percent this year to $225,900. But it said the median price of new homes would likely inch up just 0.2 percent to $241,400.
"The shift we've seen lately results from psychological factors with buyers on the sidelines trying to time the market," NAR President Thomas Stevens said in explaining the sharp shift in the group's forecast.
In this area,people were buying as soon as house went up for sale. And they offered than was being asked.
Buyers did even blink.
I always wondered how long it be before before buyers blinked. Well now they are blinking and holding their breath before signing. The results are quite interesting.
In our small midwestern market, we haven't seen a decline in sales nor in appreciation. Our average home is selling for around $73,000 up from $68,000 a year ago.
I wish I lived near you. I cant find anything decent for less than 200K where I live. I dont think they even sell homes for less thant 100k around here. Even then they are garden style condos.
Oh yeah, I am on the Mass/NH border in NH.
Sounds like a nice place to live. Maybe I can move threre. Our average house price i believe is around 200,00. I will check that to make sure.
We are not seeing any depreciation yet, but our market
was super heated. Prices were going up 30% a year
and houses were sold the day they were listed. Prices are staring to drop a little. Maybe a thousand here and a thousand here.
Either way I am not worried. My house is where I live
and never thought about it as any thing else.
(No more Olmert! No more Kadima! No more Oslo! )
So are we doomed or not? Sounds like a small window of opportunity for buyers in SOME markets to get a better deal than they could have for the past few years.
But, my OPINION (and I'm not a realtor) is that home values will continue to increase in a majority of markets after this short-term correction. Of course, I've been wrong before, in which case...PANIC, SELL NOW...WE'RE ALL DOOOOOOOOOOMED...
It is going to be fun to watch. We shall see.
Many of my neighbors have been taking out equity loans
every time their home value goes up.
I bought my home just before the market took off.
I have enjoyed watching my home equity rise up to
70% just on the increase.
Now I get to watch it decrease. But I always thought it
was a paper thing anyway.
Watch the bubble burst from a sage vantage place.
Homes will still be a good long term investment.
I think the correction maybe will just reduce the
number of speculators.
But my number 1 question is How are they going to blame this on Bush.
Many are basking in the misery of some who are upside down with their loans. One of our associate's mother took out a 100% loan last year and owes the entire principal $413,000. She talked herself into needing to sell and now the comps are $375,000. So good luck!
As with most delimmas the answer is prevention. Don't get in a position where you HAVE to sell at a certain time. Our investment philosophy is buy and hold.
I have been successful having clients take money out to move into another home and rent out their current residence. That converts them from sellers to buyers in a buyer's market.
If you like option ARM loans, pay at least the interest only option as often as you can.
I don't like 100% loans in any market, but if you must get a 5, 7 or even 10-year loan so that you have more time to wait out market fluctuations. Many of those in trouble now took out 2-3 year loans and are upset now that the interest is 1.75% higher. Again, a foreseeable situation. If you take an option ARM for say 5 years, ask yourself, can I make the projected payment 4-5 years from now.
Our buyers are coming from everywhere: first-time, marines with off-base housing allotment, retirees buying now and renting when they won't retire for 5-10 years , and more.
Business is good for us, but we start people with planning. We want them to understand the advantages and disadvantages of their options. And we want them to come back again and again and make referrals.
In short, we don't see the market as bad, we just adjust our approach to the various trends. Most people who are in trouble now could have avoided the problem with some good avice, but many realtors and loan officers are hungry for the transaction and not what may be best for the client.
Very well said.
There are good and bad decisions in any financial position.
In any housing market, the smart ones can make money.
In this market any body could make quick money.
Unfortunately many people want the largest home they can afford as soon as possible. They don't look at the whole
picture, only the monthly payments.
Good luck and please continue providing this service so we
wont see people in such bad financial positions.
Best wishes!
somments=comments
The Invisible Hand never sleeps.
Sales slowing in predominently Democratic areas due to LOW birth (high abortion) rates. The Pubbies are keeping up their end though. Look for buying opportunities soon.
They don't need to prove anything. They just need to wait until prices slip enough for there to be plenty of individual sob stories, and lots of people feeling less wealthy, and basically blame Bush without specifying anything he did wrong. "The Bush administration faces questions, ... criticism ...." "Many are asking questions." "It is widely believed that the Bush administration should have acted sooner."
Good answer and I'll bet that you will see that soon.
Like I could not see that coming!
Thanks
Why should the housing market differ from the stock market? Bernard Baruch, hailed as a financial genius a few decades ago, was asked by a reporter what would happen in the stock market over the next decade, His reply: "It will go up and it will go down". Priceless.
In the long run, both stocks and housing are good investments that will rise in value. As long as you are smart in your purchasing decisions, you can't help but make money.
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