2007 To Be A Year Of Transition For Real Estate

April 23, 2007

Most housing markets last year experienced a decline in home sales, following the boom levels of the previous two year. However, this year is expected to be a year of transition with growth emerging in many areas, according to economists at the National Association of Home Builders.

The earlier boom can be attributed largely to excess demand generated by historically low interest rates, coupled with aggressive mortgage lending practices. It’s a combination that made homeownership more affordable but also attracted investors and speculators into many markets. These factors put inordinate upward pressure on home sales, prices and production. Major downward corrections occurred in housing markets during the past year and further adjustments have extended into the early part of this year.

"Because the boom and correction cycle has largely been driven by national rather than local factors, most regions have experienced some degree of over-heating and correction," said NAHB’s chief economist David Seiders. "We expect this year to be a time of transition in most regions, with the number of housing starts bottoming out in the early months before transitioning to recovery paths."

Housing markets with the biggest booms during 2004 and 2005 are generally expected to be the slowest to return to normal levels of activity, and those that showed more restraint will be the first to show growth, it was noted.

Posted in All Things San Diego, Lending, Local Business, Real Estate, Taxes, Things of Interest