12/15/2006

Real Estate Forecast 2007

by Karen Willis

The well of wealth and prosperity is now nothing more than a mirage and in many cases, a rapidly diminishing memory. That well provided many residents across the U.S. with the good life. A good life attained through property purchases, sales, and everything in between. The past five years or so has given real estate investors of all walks, including flippers, agents, and those looking for long term investments, rapid profits and continued wealth. The National Association of Realtors reported a 12.5% prices gain in 2005. Like all good things, this one came to an abrupt end. Where it once seemed like everyone was able to invest in property of some sort, foreclosures and a stalwart end to the once booming market all too quickly replaced high hopes of housing dreams

Even Federal Reserve Chairman Ben Bernake acknowledges the current slump in housing trends. While he associates the fall in property prices and sales to a "deceleration in economic activity currently underway," (www.cbc.ca/money), many expected the inflated trends to eventually cool.

While recent years provided low interest rates and mortgage loans for just about anybody, adjustable rates and a federal increase in interest costs contributed to the market's quick decline. Media reports of the diminishing market dampened investors' interest even further.

But with the end of 2006 approaching, the New Year brings new hopes and trends - and a shimmer of light at the end of the housing tunnel. Lenders must deal with foreclosed properties and as a result have reduced prices or sold properties via home auctions. Foreclosures in 2006 are doubling not only in housing hotbeds like California, but across the nation as well.

Those looking to buy in 2007 will benefit from an increase in auctioned properties and lowered sale prices in overdeveloped markets. It's important to look beyond just the housing market and take job opportunity and income potential into account as well.

And for real estate agents? Where it once seemed like every property turned to gold, agents are having to work a little bit harder to get the sale. Real estate experts suggest creating a solid business plan, finding a niche market, and taking advantage of the internet. Whether agents use sites including Zillow.com, or strategize to increase their search engine optimization, online advantages are available.

So despite recent cooling trends, there are hot opportunities in the coming year. If you're in the market to invest, find foreclosure hotspots, areas with booming job growth, depressed markets where you can take advantage of the 1031 tax exchange, and steady mortgage loans.





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