Where is real estate heading in 2007? It depends on who you ask. Alex Markels has submitted his thoughts to U.S. News & World Report for their annual investing guide, and the outlook is grim. Here are some points to take away from the article.
* According to the UCLA Anderson Forecast, median new home prices will decline 5 to 10 percent nationally and existing home prices will stay flat.
* “[H]ouses that have become all but unaffordable [will] slowly revert to the 3 to 5 percent annual gain they historically posted before a rush of speculation pushed up prices by 20 percent a year and more in some markets.”
* Only 5% of Los Angeles households can afford to buy the median-priced home ($510,000).
Thanks to increasing delinquency in the category of people who are probably not able to consistently make the mortgage payments for which they qualified, the “subprime” market, banks may increase scrutiny before providing mortgages.
The result is sellers will have a more difficult time getting the price they feel they “deserve.” On the other hand, those waiting to time the market before buying their first home may start to look before the end of 2007. Personally, I’m just waiting until it makes sense for me to buy a house. This decision rests on the back of a number of other decisions I have to make in my life, such as where I want to live.
What are your housing plans for 2007? Will you be buying this year? Planning on attempting to sell?